With Napa’s major sources of revenues dropping at an accelerating rate in the first half of 2009, new cost-cutting may be necessary this winter, Napa City Manager Mike Parness told the City Council Tuesday.

“What’s alarming is the trend. In the fourth quarter (April-June 2009) we saw a rather alarming decrease in revenues,” Parness said.

In that period, taxes on merchant sales plummeted 15.7 percent from a year earlier. New vehicle sales were off 26 percent, furniture and appliance sales down 28 percent. Restaurant sales dropped 4 percent.

The tax on hotel and B&B beds, in recent years one of the city’s best performers, dropped 6 percent.

When revenues for July-September are totaled in December, the city should have a clearer picture of which way the local economy is going, Parness said.

“That will be key,” Parness said. If revenues continue to perform worse than predicted, Parness said he would propose spending cuts for council consideration.

The city’s general fund income for the 2008-09 fiscal year, which ended June 30, was $61.1 million — $3.1 million less than the year before. City spending was $63.6 million, $4.4 million more than the year before.

The difference between spending and revenue  — $2.5 million — was covered by dipping into reserve accounts.

“Over time you can’t continue to do that,” Parness said about the use of reserves for routine spending.

The financial situation at the end of the 2008-09 fiscal year could have been worse, Roberta Meyer, a city finance analyst, said. City departments spent $3.2 million less than anticipated.

The city’s largest source of revenue, the property tax, totaled $22.8 million, or 1 percent less than the year before.

The sales tax, the second-largest revenue stream, brought in $12.7 million, down 6 percent. The transient occupancy tax netted $8.2 million, down 6 percent. This was the largest hotel tax decline in 12 years.

The city’s major revenues are likely to be down in 2009-10 as well, Parness said.

Despite the city’s financial troubles, the city is committed to installing a boat dock on the river at Fourth Street and paving East Avenue next year, Parness said.

Both projects will occur even if the city isn’t awarded a state grant for the dock and the state holds up road funds because of its own financial problems, he said.