The government has been urged to help “immediately” as a council grapples with an overspend of almost £15m.
Durham County Council has put the “unprecedented and unavoidable pressures” down to Covid-19, soaring inflation and energy prices, and the war in Ukraine.
They say they are coping “better than most councils” – but warned there were “tough decisions” ahead.
And there have been calls for urgent and immediate help from central government.
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Councillor Mark Wilkes said: “We need an increase in government funding and we need to know urgently that help is on its way.
“We can’t afford the usual delays from central government in confirming funding and we need a response immediately.”
He said they were dealing with “cost pressures not seen for generations”, with inflation in some services “way above 10%”.
“If the government expects us to provide essential and indeed statutory services which residents need, it’s got to help us,” he told a Durham County Council cabinet meeting.
“And this cannot be done by simply telling us to put up council tax for struggling residents,” he said on Wednesday.
He said the Conserative, Lib Dem and independent joint administration had made improvements in its 16 months in power, but the government did not recognise County Durham as “a rural county with hundreds of villages spread across over 1,000 square miles of the north-east”.
According to a council report, the budget for 2022-23 is estimated to be overspent by £14.6m.
Much of this will be covered with a £10m budget support reserve created to deal with “inflation-related pressures”, leaving more than £4m to be taken from council reserves.
Cllr Richard Bell, deputy council leader and finance cabinet member, said he had written to the new Prime Minister Liz Truss and Chancellor Kwasi Kwarteng, highlighted the strain on the council and “called on the government to do more by way of financial support”.
“We can only hope that our voice and the voice of the sector is heard at a time of significant pressure on the public finances,” he told councillors.
“The budget pressures we are facing are beyond our control and it is important that government recognises this and provides us with the resources necessary so that we can plan effectively.
“We therefore call on the government to increase local government funding next year in recognition of the unprecedented and unavoidable pressures we are facing.”
He said the pandemic “continues to cast a shadow over our financial performance”.
He added: “We also face significant inflationary pressures, the likes of which we have not seen for over 40 years, largely driven by the ongoing conflict in Ukraine and disruption to the world economy caused by Covid.
“This is creating overspends across a range of areas, particularly in our energy budgets, and resulting in higher than anticipated pay awards this year.”
In July reports predicted a need to save £55m over the next four years, but Cllr Bell said: “It is safe to say that the position reported in July has deteriorated, and the challenge in terms of balancing our budgets has increased.
“We will need to rely upon our reserves this year to finance any overspend but this is not a sustainable long-term position.”
He said drawing on the council’s general reserves would take them “down below the minimum threshold for the first time”, and total reserves were forecast to fall by just over £42m this year.
But he maintained the council had a “relatively strong financial standing which, I would venture, is better than most councils”.
“It is because of our strong financial resilience that we can weather these pressures and meet them from reserves in year,” added Cllr Bell.
“But as I have said that it is not a sustainable position, and without additional funding from central government, we will face some difficult choices going forward as we consider the 2023-24 budget.”
Resources director Paul Darby said forecasts were now “considerably worse” than before, and were dominated by the impact of inflation which outstripped budgets.
He said “significant pressures” in energy budgets with fuel costs and contracts resulting in large overspends, and the pressures would carry over into next year.
He added: “I would like to say the forecasts are a worst case scenario, but they are potentially not.
“Energy prices remain extremely volatile and there are a number of areas where costs could escalate.”
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