Rising gas prices and an underperforming economy are responsible for budget problems that could affect Tempe’s public transit and other city-funded services, officials said.

Although officials said it is too early to determine if any budget cuts need to be made, a new report to be released Friday will give the city a better idea of what programs, if any, need to be cut back.

The latest tax revenue statistical report, released in July, showed the city of Tempe collected $650,000 less in sales-tax revenue than it did in July 2007.

“This July 2008 tax collection activity does not signal a strong start towards our forecasted revenue this year,” the report reads.

City Manager Charlie Meyer said the report showed a 9 percent drop in revenue collected since last year. That decrease was caused in part by high gas prices, which caused auto sales to drop by 37 percent.

Sales of furniture and equipment also plunged in June, which Meyer attributed to the current state of the economy.

“Those two categories make up a big part of our business [in Tempe] right there,” Meyer said.

Financial services manager Jerry Hart agreed that the numbers — which reflect June sales — were worrisome. But he said it’s too early to tell what kind of long-term impact they would have since the July report was released just one month into the city’s fiscal year.

“That report only reflects one month of activity,” said Hart. “We don’t know if this reflects an anomaly or an emerging pattern.”

Meyer said utilities such as water, sewage and garbage collection would not be affected by the budget problems, but services such as libraries, road maintenance, police and fire could face cuts.

“Pretty much anything the city does … could be affected,” Meyer said.

The decrease in sales-tax revenue could affect the Orbit and Flash bus lines, Meyer said.

“Those sales taxes are the main source of revenue that supports the Orbit and the Flash,” Meyer said.

Students at Orbit stops around the Tempe campus showed concern about the potential for cutbacks in the routes.

“They should try to preserve it as much as possible,” said interdisciplinary studies senior Ernie Contreras. “They should cut back on everything else before they cut back on bus routes.”

Public administration senior Brittany Winston said high gas prices made this a worse time than ever to consider cutting back bus routes.

“With gas prices, people need this kind of transportation more than ever,” Winston said. “It would be a huge inconvenience to make cuts to it.”

Meyer said the city was assessing the economic damage done by June’s drought in sales, but it was too early to begin considering cutting back on city services.

“We don’t anticipate having to make any cuts [in transit],” Meyer said. “We are now in the process of developing recommendations to the [City] Council.”

Hart said the tax revenue report set to be issued on Friday would give the city a better idea of what programs, if any, need to be cut.

“It is too early to determine that,” Hart said. “After about three months of activity, we’ll be able to make an assessment of where we stand.”

This week’s report is expected to detail tax revenues from July and August.

Reach the reporter at derek.quizon@asu.edu.