Spilsby Town Council has increased its council tax precept by one per cent and warned that more substantial hikes may be necessary in years to come.
The increase, which is equivalent to less than a penny per week for a Band D property, was agreed by councillors at Thursday’s meeting.
But with changes to government funding announced just days before the meeting, councillors feared more significant increases will have to follow.
In April, the government is withdrawing subsidies which previously covered the shortfall in council precepts posed by benefit claimants who did not pay council tax.
Although a £7,740 grant is available for Spilsby Town Council to cover the coming year’s deficit, that support is expected to diminish next year and withdraw completely after that - forcing local authorities to find other ways of bridging the funding gap.
Finance officer Coun Trevor Beaumont said: “If we want to maintain services our precept will have to increase quite considerably over the next five years.
“Hopefully for the next two years we will have this support grant, but after that we might have to start pruning our spending quite drastically, so I’m just wondering whether we should start thinking about that now.”
Councillors felt the £7,740 grant together with the previously recommended one per cent precept increase would be sufficient to cover its expenses for the coming year, despite the last minute news of funding changes.
However, with troublesome times expected ahead, councillors were reluctant to agree the draft budget, which drew upon council reserves they felt could no longer be spared and decided instead to reinvestigate the matter at a finance meeting on February 19.
Speaking after the meeting, Coun Beaumont added: “We have deferred the budget because of what might happen in the future - we have our reserves but they will start to diminish, so this year we are going to reinvestigate our budget to prepare for future funding reductions so that we act pro-actively and not reactively when it’s too late.”