Frame Woods employee Mary Ellen Kriegh, foreground left, helps Robin Gingerich choose some framing options for a family document Thursday. Sales tax collections in the city were down 5 percent for the first three months of the year, as consumers spent less in the sagging economy.

Lawrence consumers clamped down on spending in the first quarter of 2010, putting the city on pace for its largest sales tax decline in recent memory.

Sales tax collections — excluding the three new sales taxes voters approved last year — were down 5 percent for the first three months of the year, and leaders at City Hall said the numbers would mean more tightening of the city’s budget.

“We are concerned about the numbers, but we are pleased about our ability to manage our expenditures to our revenues for the past several years,” City Manager David Corliss said. “We plan on keeping that skill in 2010.”

But if sales tax numbers stay on their current pace, the cutting may have to go deeper than in past years. City leaders were hopeful 2009 marked the low-water mark for sales tax collections. The city saw a 3.1 percent drop in collections last year.

A 5 percent decline — if it stays on that pace for the year — would be the largest drop since at least 1995, which is as far back as the city has easily accessible sales tax data.

Corliss and his staff are betting that sales tax numbers won’t remain that low. Corliss has revised 2010 revenue projections for the city’s main operating fund downward by about $1.74 million. If Corliss assumed that the current sales tax trend would continue, revenue projections would have needed to be reduced by about $2.5 million.

Corliss said he’s seeing some signs of improvement in the economy, including 45 single-family building permits in the first quarter, compared to just 110 for all of 2009.

“I’m not talking about a boom here, but there are signs of a little more activity than we have had recently,” Corliss said.

If his revenue projections hold, Corliss believes the city will be able to manage the 2010 shortfalls without major service reductions. Instead, the shortfall likely would be covered through delayed equipment purchases, reductions of contingency funds and other similar cuts. Corliss said city layoffs also did not appear likely.

Some city commissioners also are optimistic.

“I still think there is some room for trimming,” Commissioner Aron Cromwell said. “Whether we see a 3 percent decline or a 5 percent decline, I think we’re still going to be OK.”

The city’s first quarter financial report also provided information on several other city funds, including:

• Water and sewer revenues continue to be virtually stagnant despite rate increases approved last year. Revenue from water and sewer bills increased by less than 1 percent for the quarter.

• Revenues from bus fares and bus passes for the city’s public transit system are down about 8 percent. Ridership, however, is up about 61 percent for the quarter — largely because the T is now allowing Kansas University bus pass holders to ride the city’s system for free. Expenses for the T also are down by about 9.4 percent, largely due to cheaper fuel prices.

• The city’s solid waste department continues to show signs of a financial turnaround. The trash service collected $336,000 more in revenue than it had in expenses for the quarter. Previously, the department was operating at a deficit.

• Wet and cold weather has hammered the city’s Eagle Bend Golf Course. Bad weather caused revenue to drop 41 percent for the quarter. The course operated at about a $120,000 deficit during the first three months of the year.