NEW Forest District Council faces having to plug a financial hole worth almost £1.4m even if it hikes council tax by the maximum allowed for the next three years, ruling councillors have been told.
Cabinet members were advised to review their portfolios and “maximise income where possible”, said a report from officers who also recommended investing in more property to bring in £1m.
Other suggestions included exploring “alternative models of delivery” for the health and leisure centres and developing new waste and parking strategies.
The figures were laid bare in a report to cabinet which revealed NFDC has managed to balance the books for its 2020/21 budget – despite added spending of £923,000 and incurring nearly £3.85m of losses due to the pandemic.
The paper warned mitigation measures in 2020/21 would need to continue, with the outstanding budget deficit over the medium term being £2.4m.
It said: “The government currently allows for the maximum allowable council tax increases in all of their funding assumptions going forward. At the present time, this is the greater of £5 or 2.99% per annum.
“To summarise, over the period covered by this medium-term financial plan, assuming maximum allowable council tax increases are applied, the council requires additional funding or income, or reduced expenditure, or most likely a combination of both, equating to £1.388m.”
The cabinet member for finance, Cllr Jeremy Heron, said the “ever-changing landscape” meant the council faced “few hard and fixed certainties” and a range of revenue and expenditure options.
The council’s “prudent approach” ensured it did not over-extend its finances or inhibit its ability to provide “vital support and services to our community”, Cllr Heron said.
He added: “I feel we can be confident in adopting this position in no small part through the historically sound financial management of this council and the swift and decisive actions in repositioning our priorities in light of the pandemic, all of which has helped us in maintaining our levels of reserves.”
The biggest spending additions were £1.8m to the leisure and wellbeing portfolio, mostly because of lost income by the forced shutting of its five leisure centres. Other extras were £517,000 in environment and regulatory services, and £436,000 in housing services.
But the report detailed that NFDC mitigated costs to the tune of £1.183m by saving £500,000 through vacancy control and another £200,000 by taking non-essential projects off its asset maintenance and replacement programme.
It also made savings worth £483,000 following reviews: reducing travel by £32,000, leisure centre operations by £132,000 and keeping £15,000 budgeted for the cancelled New Forest Show.
The council found new ways of making money too: £139,000 from commercial investments and £75,000 from people taking up its garden waste service.
There was also just over £2m of public sector support funding, but the council has also had to cope with an additional pay award of £150,000 and the removal from the budget of projected collection fund surpluses totalling £892,000 in business rates and £218,000 council tax.
The pandemic has forced the council to adjust its medium-term financial plan, which now only covers the next three years as the Chancellor’s upcoming comprehensive spending review had the potential to affect its funding sources “so significantly”.
In its calculations NFDC estimates the worst-case scenario in its recovery would be a return next year to 60% of pre-pandemic income levels.
The capital programme for 2020/21 has extended as it now includes £1.5m improvements to Milford sea wall, the report added, and still includes a £5.54m relocation of Hounsdown depot to Hardley and £500,000 on to introduce smarter working practices to NFDC.
A modernisation programme of public toilets is now intended to be frozen, with a budget being reinstated for 2021/22.