It's not often that a budget briefing brings hundreds of people down to a City Council meeting on a Tuesday afternoon.

But it's not often that the city is discussing how to plug a $32 million hole in the budget with only six months left in the fiscal year.

Worried after reading headlines that announced the city was considering cuts of 15 percent to city departments, supporters of police officers and firefighters came out in force to hear City Manager Mike Letcher deliver the bad news to mayor and council. After the chamber filled up, hundreds of people were left to listen in the lobby of City Hall and on the sidewalk outside.

Here are the big takeaways from Letcher's report:

• Like nearly every other government in the state, the city is in dire financial shape, with a projected budget shortfall of roughly $32 million. While spending has stayed within the budget, the city isn’t collecting as much money as officials estimated.

The biggest chunk is a drop in sales-tax collections, which are expected to come in $10.1 million below forecast. The city also didn’t get $5.3 million that it is owed from a lawsuit and various other funds are coming in below expectations.

"We need to immediately close this budget gap," City Manager Mike Letcher told the council.

• Letcher presented the city council with a bunch of proposed spending cuts, including eliminating vacant positions, holding off on contributing to the city’s rainy-day fund, refinancing $1.5 million in debt and cutting off a program that that helps people in tough straits with water-bill payments. But that’s mostly nibbling around the edges of the problem.

• The city will likely have to raise fees for parks-and-rec programs, including sports leagues and leisure classes.

• Outside agencies—the Tucson Musuem of Art, Access Tucson, the Botanical Gardens—are facing cuts of 10 percent this year and 30 percent next year.

• While council members were reluctant to admit it (especially two weeks before Christmas), the city could be forced to lay off employees and reduce city services.

• Letcher is calling for structural changes in the city budget—the kinds of changes that are often politically unpopular.

"We're out of one-time fixes," Letcher said.

• Among the new proposed taxes: A short-term “landlord tax”—the rebranded rental tax that the council rejected earlier this year—that could sunset in 2016.

• A new property tax, approved by voters, to supplement funding for public safety, streets, buses and parks, which would be phased in and eventually replace the rental tax.

Want more details? Here's Letcher's PowerPoint presentation: BudgetRevUpdate12-15-09.pdf

After digesting Letcher’s briefing, Councilman Rodney Glassman busted on Letcher for not bringing forward the falling revenue figures sooner. "It would have been nice to know this sooner," Glassman said.

Letcher replied that the shortfall developed rapidly over

the last 60 days.

Newly elected Councilman Steve Kozachik, a Republican who replaced Democrat Nina Trasoff in Ward 6, said the city should avoid cuts to the police and fire departments. “We need to do everything we can to hold them harmless,” he said.

Letcher said it wasn’t realistic to think “that you can hold one group harmless and cut everyone else.”

Kozachik got a rousing round of applause when he suggested that the city sell off downtown real-estate holdings.

Glassman pushed for a meeting next week to give Letcher more policy direction, which was approved on a 4-3 vote. When Mayor Bob Walkup said he’d like to attend, the council voted to schedule a time when all members could be present.