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CHARLOTTE – Slower sales are leaving the Queen City millions of dollars in the hole, according to leaders at the Charlotte City Council retreat Thursday.

The group is meeting in Tryon, N.C., to go over goals and priorities for the upcoming fiscal year – a year that looks like tough decisions will need to be made. While city leaders say the economic situation isn’t as dire as it was last year, there are still plenty of challenges which must be dealt with not only this budget year but the next one as well.

Those decisions could impact some city services.

"It's certainly not a perfect situation, but it's also not a perfect storm,” described City Manager Curt Walton at the retreat.

While property tax revenues are above expectations, city officials predict sales tax revenues through June 30 will fall $8.5 million under projections.

"What we all can be prepared for is that we know things are not as we expected them to be -- they're a little worse,” said council member, Warren Turner.

The good news is that officials say city departments saved enough money in recent months, and there’s enough cash in reserves to offset the blow and balance this year’s budget.

"We have issues, but we have a plan in place,” said Walton.

However, officials say the next budget year starting in July will present a new set of challenges. The budget team said assuming city employees – including firefighters and police officers – don’t get a pay increase, they still must find ways to fill a $9-11 million budget hole to date.

"There are services we may look at for elimination that aren't necessarily popular, but when you have those kinds of gaps you have to look at everything,” said Ruffin Hall, Charlotte city budget director.

In recent weeks, the city’s budget team met with department heads and gave ideas on where they can cut costs to make ends meet.

"What can we eliminate, what can we suspend for three years, and what may be working OK, but is inefficient to deliver,” listed Walton.

Still, leaders say, it’s a tradeoff.

“We're going to have to balance service with a decrease in revenues and a growing number of people coming to Charlotte expecting things,” said council member, Edwin Peacock III.

Charlotte officials also cautioned council members Thursday that there are still months of sales tax figures yet to come in, which could shorten or widen the expected budget shortfall for next year.

City leaders will have budget retreats in March and April, with the proposed spending plan being unveiled in early May.