RHONDDA CYNON TAF Council is currently facing a £35m budget gap for next year.
The council’s finance director Barrie Davies gave a presentation to full council on Wednesday, September 20 with the latest on the medium term financial plan covering up to 2027.
Based on the council’s current forecasts, RCT is currently facing a budget gap of just over £35m assuming a 3.1% increase in funding from Welsh Government (which would be worth £14.61m), if there was a 3.9% council tax increase (worth £4.9m) and assuming a £9.1m use of reserves.
The council’s modelling also assume a spend of £18.65m towards the 5%+ ,pay award, £8.18m towards non pay inflation and £18.58m in budget pressures.
And assuming 2% increases in Welsh Government funding over the following two years the council is currently projecting a £26.89m deficit in 2025/2026 and a £23.49m deficit in 2026/2027.
He said that in the current financial year the council has balanced the biggest budget deficit it has ever faced.
Mr Davies also said reserves are often inappropriately referenced as being the solution to balancing budgets and solving financial challenges and that reserves are a pillar of financial health and long term sustainability which are set aside for specific purposes and financial risks.
He also highlighted how much of its reserves the council would have to use if it were not to make any base budget savings or “if they sat on their hands” in terms of decision making for three years.
He said they’d need to use three lots of £35m just to deal with the 2024/2025 budget gap across the three year period along with a further £26.89m in 2025/2026 and a further £23.49m in 2026/2027 which would mean that to balance the budget gap over the next three years by using reserves alone and and not making any budget cuts they’d have to use £182m of reserves across the three years.
Mr Davies said that would also mean they’d have to deal with a £85m budget gap rolled forward from these three years into 2027/2028.
He said: “So whilst kicking the can down the road might have some appeal it’s simply not a strategy that we can legitimately put our name to and recommend to cabinet as being in the financial interests of the taxpayer of Rhondda Cynon Taf.”