The city of Langley continues to feel the economic pinch, and if things don’t pick up may be forced to amend its budget and make more cuts, city finance director Debbie Mahler warned.

“It’s something we’re going to have to watch very closely,” Mahler told the Langley City Council this past week.

“We’ll discuss it with the council soon,” Mahler said later. “Whether they amend the budget or wait to see what happens is up to them.”

“We’re paying really close attention,” Mayor Paul Samuelson said. “We don’t want to get ourselves in any more trouble than we’re already in.”

The city, which already has reduced jobs and work hours, has been hit hard by declining tax revenue since the middle of last year. Hotel-motel tax revenue, in fact, showed a decline in 2009 for the first time since 2003, Mahler said.

Tax revenue from lodgings dropped by $17,000 in 2009 from the previous year, indicating that more visitors were opting for day trips to the island instead of staying overnight, she said.

“That was the most surprising,” Mahler said. “It’s the first time ever that it’s gone down. It’s been going up every year.”

Meanwhile, sales-tax revenue in 2009 was $45,000 less than in 2008, she said.

The city’s 2010 budget is about $4.4 million, slightly higher than last year’s $3.8 million, but less than 2008’s $4.8 million and $4.5 million in 2007.

“The general fund is a little sad, but the rest are just fine,” Mahler said Thursday.

This year’s general-fund budget is $1.3 million. It pays for administrative functions including police, records, finance and salaries.

The rest of the budget funds fee-based city services, including street maintenance, water and sewers, the city cemetery, tourism and capital reserves, Mahler said.

State law allows municipalities to borrow from their healthy funds to help out those not so healthy, a course of action many counties and cities have taken.

“But that’s something we don’t really want to do,” Samuelson said. “We’d have to pay it back with interest.”

Hours for most employees already have been slightly reduced, and four part-time contract positions have been eliminated, along with one full-time position in the finance department. Meanwhile, city hall on Second Street is closed to the public on Fridays.

Mahler said that, besides the decline in tax revenue, the city’s budget also is being hit by the stagnant housing market and corresponding decline in building projects and real estate taxes.

“This is happening all over the state and country,” Mahler said.

“Many, many municipalities and counties are having a very hard time financially.”

“We just may have to try to find more cuts,” she added.

“That’s difficult and painful for me, because it affects people’s lives,” Samuelson said. “But at the same time, it gives us a real opportunity to get leaner and to fine-tune the system,” he added.

Meanwhile, as for the decrease in lodging revenue, not everyone in town seems to be effected.

“Last year there was definitely a dip, but it’s picking up now,” said Jacki Stewart, owner of Country Cottage Bed & Breakfast on Sixth Street. “April’s looking good, too,” she said Thursday.

Stewart, who with her husband Tom Felvey has owned the B&B for eight years, attributed the stability to repeat customers “who come no matter what” to celebrate holidays, birthdays, anniversaries and other occasions.

“Innkeepers are optimistic people,” Stewart said. “That’s what keeps you going when things are rough.”

She said that while many people in town bemoan the state of the local economy, most of her out-of-town guests have a different perspective.

“They still think Langley is a fun place to be,” Stewart said.

Mahler declined to predict the future, but she thinks reports of a recovering housing market, and new businesses continuing to open in Langley, offer a glimmer of hope.

“We’re keeping our fingers crossed,” she said. “We think it’s going to be slow, but we’re hoping the economy will start to come back a little.”