A RECOVERY plan has been drawn up by Chester City Council to deal with a massive £1.1m shortfall which has hit the Town Hall coffers thanks to the global economic crisis.
The council's Tory administration has been pouring over the council's books with top officials to bring the budget back into the black.
The ruling Executive was told by resources portfolio holder Cllr Adrian Walmsley (Con, Newton St Michael's) that a package has been drawn up to deal with the deficit.
Cllr Walmsley said in a report that at the end of August, the council's budget faced a shortfall of £923,000 by the end of next March mainly because of the impact of the global credit crunch on the council's income.
“Since then the position has further deteriorated due to declining income on park and ride and the extension of the successful Free after Three car parking policy until the end of March 2009,” said Cllr Walmsley.
Pointing out the administration has decided not to remove the concessionary fares scheme from the council's park and ride sites, he revealed the shortfall has now risen to over £1m.
“It is considered imperative that a package of measures is implemented now,” insisted Cllr Walmsley.
He stressed, however, that the council's expenditure plans are on target.
The pressures include a £336,000 shortfall on park and ride due to declining income and £188,000 in car parking for the same reason, reduced income totalling £365,000 in the development service and a loss of £76,000 worth of income due to the closure of the town hall.
The recovery package, which details savings of as little as £300 on rural bus tours and £500 on arts development, includes reductions of £296,000 in insurance, savings of £200,000 on staff turnover, increased interest of £100,000, additional recycling income of £60,000 and a £50,000 saving in business rates at the town hall.
Although the figures balance the budget, Cllr Walmsley warned: “Given the status of the economic cycle it is probable that the council's budget position might deteriorate further over the coming months.”
He revealed that officers are to produce regular monthly reports and the administration will take “appropriate necessary action” to bring the budget in on target.
Precautionary measures include only filling any vacant posts if they are essential to protect the delivery of frontline services, avoiding costs and taking steps to optimise income.
“The budget will balance providing things do not get worse with the credit crunch,” emphasised Cllr Walmsley.
“We are very mindful we are going through the global credit crunch and particular attention is being paid to a budget monitoring,” said executive director Jim Cassin.
The council was already looking at other ways and means to balance the budget but Mr Cassin admitted: “I do not have a list of things in my back pocket.”
He said the council was looking “very carefully” at whether it should spend money or not.
In a major statement to the full city council ahead of the Executive meeting, Cllr Walmsley said: “Whilst the city council last February did set a balanced and prudent budget for 2008/09, it has been blown off course significantly by the global credit crunch which is moving the economy into recession.
“The decision to introduce and now to extend the Free after Three parking initiative, costing the city council £111,000, has worsened the financial situation further.
“We have carried out a careful and detailed budget management exercise and this reveals budget pressures of some £1.1m.”
He continued: “Our expenditure budgets are on target. Our expenditure is as planned and we have no issues with expenditure at all, the problem is with income.
“Our income budgets are less than planned for reasons beyond our control in areas such as car parking, park and ride and issues such as development control and land charges.
“We have undertaken a root and branch review of all income and expenditure budgets and have implemented a series of operational efficiencies to bring the budget back into balance whilst recovering the estimated shortfall.
“We do not anticipate any detrimental impact on front line services at this time,” he added.
Cllr Walmsley also pointed out the city council is committed to transferring £1m from its reserves and balances to the new Cheshire West and Chester authority next April.
“Despite the worrying situation with budgets caused mainly by both the global and national uncertainty, I am confident that this commitment can be met given the prudent measures being taken to reduce expenditure,” he said.
Commenting on the situation, Kelsall Cllr Andrew Garman (Lib Dem) pointed out to the council that three months into the financial year, the projected deficit had only been £611,000.
“Now it is a massive £1.1m. That would just about wipe out our reserves and balances,” he suggested.