The city’s economic outlook is already showing worrying signs. On Monday, officials released an update of the city’s current budget.

City Finance Director Jim Blake published actual expenditures and revenues for January 2010, and the forecasted monthly amounts for the rest of the year, for the Issaquah City Council Major Planning and Growth Committee (MPGC).

Revenue numbers came in $49,000 lower than expected, Blake said, mainly due to lower-than-expected sales tax revenues. Those tax receipts were one percent below budget estimates and smaller than amounts collected in 2009.

Though that was a negative sign, the city finance director said the trend would be better understood after sales tax revenues were reported next month. Those numbers were expected to reflect sales transactions made during the Christmas holiday period, normally the highest sales tax month for the year. Overall, the large revenue declines seen over the past two years appear to have abated.

“We flattened out,” said Council President John Traeger. “That’s the good news. But there are certain (expenses) that are going to go up, no matter what you do.”

Utility and property taxes were also lagging behind estimates.

Blake said other sources of revenue were expected to hold steady from 2009, meaning a projected $727,556 gap in the budget could emerge.

While spending levels were also below forecast estimates, MPGC members began to express concern over what they said was previously considered a “conservative” budget.

“The message here is a lot depends on the next month or so,” said Councilmember Fred Butler.

Traeger agreed.

“If we don’t have an increase over actual revenues in 2009, we’ll start running short,” he said.

Savings might be found in current spending. Blake said the city spent less than estimated in January and forecasted the city could manage to spend less throughout the year. The city anticipates that the rate of spending will fall each month.

“A decline in usage to 97 percent would result in a savings of $893,926, which would offset the (negative) revenue estimate,” Blake said.

Elsewhere in the budget, the Street, Water, Sewer, and Stormwater Funds were expected to remain fiscally healthly throughout 2010.

However, the Resource Conservation Fund is projected to be in a deficit because anticipated reimbursement payments for services rendered on the z-Home project hadn’t yet been received from the city’s development partners.