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Herefordshire Council puts tax rise and budget priorities to the public
CASH-strapped Herefordshire Council is putting its 2014-15 budget priorities and the potential for a council tax rise referendum out to public consultation.
The Hereford Times revealed this week that the council has to find a further £33m in savings over the next three years on top of cuts either planned or already underway.
A budget report prepared for the council’s cabinet warns that there are now “no alternative options” for savings that do not “radically effect” the provision of services.
With services facing even deeper cuts, if not being lost completely, a council tax rise of no more than 2% is recommended - anything higher being the trigger to a referendum.
Now, the council has put its budget plans out to public consultation.
Responses will be considered once the 2014-15 budget setting process starts in earnest in January.
The consultation outlines the council’s own spending priorities – children and young people, social care, investment in roads, jobs and homes – and pitches the potential for a referendum on raising council tax by 5%.
This afternoon, cabinet heard that the council does have an option to capitalise its spend and treat revenue costs as capital costs, but only if the government says so. Capitalisation means more flexibility because the council can meet costs using existing borrowing powers or capital receipts, but it would add to borrowing costs over coming years.
A case for capitalisation must be made to Whitehall by the end of this month and only spend above a threshold of £2.29m, based on spending and reserves, could be capitalised.
The £33m of further savings - compared to the current budget - is apparent as the council’s funding from central government falls from £49m this year to £28m in 2016/17. Meeting targets means a saving of some £15m now must found on the 2014/15 budget alone.
On available figures, the council has assumed it can increase council tax by 1.9% each year in calculating its savings.
The cabinet report confirms the council is on currently course for a £4m overspend on its 2013/14 budget.
Nor, the report reveals, can the council keep dipping into its reserves to ease the position, with those reserves now limited to the extent that any overspend in year would need to be recovered in 2014/15, adding to already significant savings forecast at around £12m.
At the end of 2012/13 the council held £4.6m in general reserves compared to £6.1m in 2011/12. However, the 2013/14 budget includes a transfer to the general fund reserve of £2m, bringing the balance to £6.6m.
Adult social care remains the biggest pressure with a projected overspend of £4.3m and existing mitigations that can recover only £400k. There is also a real risk of savings already identified either slipping or not being delivered.
Current financial models show the council must save £11.6m 2014/15, rising to £15.5m if the current level of overspend continues, plus a £3.9m replenishment of reserves.
Final 2014/15 budget decisions will be taken in the New Year.
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