Council chiefs called for a minimum 4 cent increase in funding for each local authority and three-year settlements to avert the risk of a Welsh council going bust.
Andrew Morgan, leader of Rhondda Cynon Taf council, warned of “extreme” budget pressures as he appeared before the Senedd’s finance committee on January 15.
He welcomed a £253m uplift in the overall settlement from the Welsh Government but contrasted the increase against a £559m funding gap in the 12 months from April.
He said: “Clearly, the figures show it actually only meets about half of the actual demand for the coming 12 months, so there is going to be significant pressure on local authorities.”
Cllr Morgan, who is leader of the Welsh Local Government Association, the collective voice of Wales’ 22 councils, added: “It is increasingly difficult to be able to explain to the public that we’ve put council tax up while still reducing services.”
He told the committee: “When it comes to council tax, most local authorities are in the range of 5 per cent or upwards for budget planning at least at this stage.
“We are acutely aware of the pressure on local residents in terms of the cost of living, so it is a real dilemma for local authorities.”
Pressed on whether any councils in Wales could issue section 114 (bankruptcy) notices, Cllr Morgan said: “I certainly don’t think there will be any risk of 114 notices in the coming year but that’s not to say that there isn’t a risk there in the medium to long term.”
Asked about Audit Wales’ warning that councils are financially unsustainable, Cllr Morgan called for a three-year settlement to allow planning beyond a 12-month cycle.
He said: “Welsh Government comes out with a provisional settlement in December, that only gives us 10 or 12 weeks for us to line up all our ducks in terms of making budgets add up – that’s what’s not sustainable, I would suggest.”