The city released financial data today that shows how the nation’s economic downturn is hitting home here in Seattle — drops in expenditures by consumers and businesses mean drops in tax revenues for the city. The city is now forecasting a $29.5 million drop in revenue from last year’s total, 3.7% lower than what was forecast back in November. Seattle PI reports the larger than expected shortfall pencils out to a $43 million gap in projected revenue and planned spending by the city. That, in turn, pencils out to the city needing to make more cuts in services and projects to keep the budget balanced. City says it is looking at an additional $41 million in cuts for 2010. Here is the presentation the city made available with the announcement:

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Seattle Times reports that Mayor Greg Nickels’ requested department cuts won’t be enough to cover the shortfall nor can the city’s reserve funds bridge the gap. That leaves cutting budgets and canceling or downsizing projects as the alternatives to maintaining a balanced budget. West Seattle Blog reports we’ll likely hear about the first planned cuts next week.