The coronavirus pandemic is expected to cost Torbay Council an extra £7.7million next year.
The uncertainty over Government funding means it currently has a predicted income gap of £2.6million but is not planning any major cuts to services.
The authority’s leadership has drawn up a draft budget for 2021/22 which it published for consultation on Tuesday.
The council will consider feedback and must eventually set a balanced budget in February for the financial year starting in April.
Launching the consultation, the council’s Liberal Democrat leader Steve Darling said the lack of information from the Government meant planning the budget ‘in the dark’.
Cllr Darling said the budget plans were being presented in ‘a period of extreme uncertainty’ due to Covid-19 and estimating future spending to respond to the pandemic was difficult.
He said he was ‘bitterly disappointed’ that the Government had rejected calls for a new furlough scheme tailored for the hospitality industry.
He warned Torbay, which is heavily dependent on the tourism and hospitality sector, is expecting to see more job losses when the current scheme ends at the end of the month.
Cllr Darling said: “We are sending a strong measure out that we are here to support you. We know that people are hurting and want to be supportive to them.”
The proposals include a council tax increase of 1.99 per cent, just below an expected two per cent cap on rises, which would raise an extra £1.4million income.
That would see the bill for an average Band D home go up by £31 a year, before other charges are added from the police, fire service, and Brixham Town Council for residents in that area.
Cllr Darling said in a statement: “These budget proposals are presented in a period of extreme uncertainty resulting from the ongoing impact of Covid-19, in particular how this is being felt in our local economy.
“It’s difficult to estimate how much income we will receive as a council to support our services or how much we will need to spend as we continue to respond to the pandemic.
“Equally, there is uncertainty over the national financial position including the level of funding that will be made available for local authorities in 2021/22.
“At the start of the year we said we were facing a challenging financial situation, in common with other local authorities.
“In March this year, everything changed. Covid-19 has had an unprecedented impact on our communities and I am in awe of the fantastic response across Torbay.
“We have been working hard with our partners and our communities to help those in most need and we want to continue to work closely together.”
The council has had to make a series of predictions about how the pandemic will affect its income and spending next year.
It expects to see car park income around £500,000 below a normal year, and rental income drop by a similar amount.
It is expecting to see an increase in demand on the Council Tax Support Scheme for working age claimants of £750,000, an extra £750,000 go on housing the homeless, £500,000 on home to school transport and £500,000 on supporting Torbay Leisure Centre in Paignton and the Riviera Centre in Torquay.
The economic downturn as a result of Covid-19 is expected to result in non-payment of around £5million of council tax and £500,000 of business rates, with the impact on the council’s finances spread over the next three years.
In total the council is estimating extra spending pressures of £8.8million next year, but it is proposing savings, cost reductions and efficiencies worth £6.2million, leaving a £2.6million spending gap.
The savings include £1.5million from waste services by increasing recycling under plans to change household collections from fortnightly to every three weeks, and switching to LED street lighting which would save around £50,000.
Other savings include improvements in children’s services and streamlining and modernising council services, with developments such as ‘paperless’ council tax bills, which also support the council’s carbon reduction plans.
The council’s chief finance officer Martin Phillips said the Government had so far acknowledged the extra financial pressure on councils from the pandemic, and he was hopeful extra funding would be provided for next year. If not, the options to plug the gap included using reserves as a one-off, with services cuts as a last resort.
Mr Phillips said the predictions of the impact of Covid-19 were based on what had been seen so far.
He said: “We are dealing with so much uncertainty, all we can do is identify the risk and put a reasonable value against it.” He said the council had approved two solar farm projects, with one expecting to come on stream next year and produce around £100,000 income. They are expected to bring in between £300,000 and £400,000 when they are both operational.
The draft budget report details revenue spending of almost £116million and also highlights how the council is using its capital investment programme to support economic regeneration.
Schemes include the compulsory purchase of Crossways shopping centre at Paignton to replace it with sheltered housing, a housing development at Preston Down Road in Paignton, bids for Government funds to regenerate Torquay and Paignton town centres, and plans for employment space at Torquay Gateway.
Plans are also being considered for Brixham town centre and further investment at Brixham Harbour.
Consultation on the spending plans will continue until December 4. Details are available including a link to a questionnaire on the council’s website at www.torbay.gov.uk/budget-202122.