More than $18 million will be cut from city programs and services, starting this month, Mayor Gavin Newsom announced on Thursday, saying the belt-tightening was needed in the wake of a Controller’s Office report indicating that the projected budget deficit for next fiscal year has increased to $233 million.

The report indicated that The City is doing well with increased money from its property, hotel room, and sales taxes; however, those revenues are negated by shortfalls expected in federal grant money and state sales tax dollars expected to come to San Francisco.

The six-month report from the Controller’s Office projected that The City would finish the year with only $21.37 million in its general fund, a $4.03 million decrease from its initial estimate, which increases the expected budget deficit for next fiscal year to $233 million.

The budget cuts and service reductions will go into effect by the end of next week and last until June 30, the end of the fiscal year, Newsom said, stressing that while some programs and services were eliminated, others have only been suspended and not canceled.

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Among the mid-year cuts are funds for the International Arts Festival, a study on fiber optics for citywide Internet access, chronic-care nurses, the cleanup of Chinatown alleyways, the Bernal Childcare Facility and The City’s only 24-hour drop-in center for the homeless.

“This is nothing compared to what we should expect in a number of months when I submit my balanced budget,” Newsom said.

Part of Newsom’s cuts are $250,000 for the GLBT Historical Society to buy a temporary site in the Castro, a cut that society Executive Director Paul Boneberg said came at “exactly the wrong time.”

With the filming of the Harvey Milk biopic currently under way, Boneberg said now was a particularly crucial time for the GLBT history because of worldwide interest in Milk, The City’s gay and lesbian history, and the income that interest generates.

Members of the Board of Supervisors told The Examiner that while they understood the need for fiscal restraint during difficult economic times, that they were unhappy about cuts that impacted important projects within their district.

Supervisor Tom Ammiano, a proponent of the fiber-optic study, said the announced cuts were a “reflection of tension” between the mayor and the board.

“If you look at the districts and then you look at the supervisors of those districts, it’s suspicious,” he said.

dsmith@examiner.com