Non-permit parking in the 5-level deck also has declined, although the deck remains 75 percent to 90 percent full on the four covered levels, city officials said.
Martin attributes the drop to people parking in street level lots, some of which are privately owned, and a possible drop in business activity downtown.
The city has been expanding its North Potomac Street parking lot and has tentative plans to provide more parking near the planned District Court on West Antietam, Martin said.
Planning Director Ric Kautz said surface lots are needed downtown for shoppers and people who use the courthouses.
"The parking deck is fine, but you can't build a parking deck in every corner. People tend to prefer only to walk a short distance," Kautz said.
Parking lots also attract businesses, which expand the tax base and add to the city's coffers, said Tom Newcomer, a downtown store owner and chairman of the Hagerstown-Washington County Chamber of Commerce's downtown task force.
Parking shouldn't be looked at in terms of profit and loss, he said.
Downtown restaurant owner Charles Sekula said some people decided against opening eateries downtown because there wasn't enough convenient parking for customers.
But the city can't continue to lose money, Martin said.
Unless demand for parking picks up, rates increase or city officials curb their plans for more parking spaces, the deficit could rise to $155,434 in fiscal year 2000, Martin said.
"We won't allow the fund to go that deeply into deficit," he said, but he declined to reveal whether rate increases would be included in the budget being prepared for next year.
Martin acknowledged that the North Potomac Street parking deck might be suffering more than usual because of competition from other city-owned parking lots.
If there's no immediate demand for more spaces, "we definitely are creating competition for ourselves," Martin said.
The deck has lost $4 million since it opened 12 years ago.
Operating losses and debt service this fiscal year are estimated to be $339,324, Martin said.
The city is making annual payments on the deck of $130,000 to $400,000 until June 30, 2012, when the loan will be paid off.
Of the deck's 431 spaces, 285 are occupied through monthly permits.
The city needs to do a better job of promoting the value of the deck, such as protecting vehicles from summer heat and winter precipitation, Martin said.