Tax rise will not cover budget shortfall, warns Powys County Council
Council tax increases alone cannot replace funding lost to Powys under national economic changes, the county council has warned.
Powys County Council has just ended a budget consultation exercise which asked the public for views on how it should reduce its spending by £27m over the next three financial years.
Council leader Barry Thomas said: "During the consultation we received a great deal of very positive feedback but were also asked by many residents why the council tax increase of four per cent that we approved earlier this year was not enough to balance the four per cent cut in government support and why we are still looking for savings.
"The council receives its funding from three main sources, two controlled by the Welsh Government – the revenue support grant and funding from business rates – and the third being the money raised locally through council tax." Cabinet member for finance, Councillor Wynne Jones added: "Although local government finance is complex the answer is quite straightforward, it is the relative size of the funding pots that makes the difference.
"Since government funding makes up the vast majority of our budget, a four per cent cut in their side is much larger than the four per cent on our side.
"If we assume a budget of £300m – for illustrative purposes only – the Welsh Government element would be £225m and council tax raised in Powys would be £75m.
"A four per cent cut in the Welsh Government side reduces funding by £9m while a four per cent increase in council tax provides an extra £3m leaving a £6m shortfall.
"When you add inflationary pressures caused by wage increases, national insurance, unavoidable legislation changes and increased service demands the size of the problem becomes all-too clear.
"We would have to increase council tax by around 24 per cent to offset national spending changes."
