North Yorkshire Council chiefs are warning that the authority will need to use £57m from its reserves over the next three years if it does not make more savings.
Executive member for finance - Councillor Gareth Dadd - has warned colleagues to prepare for the most severe budget round ever faced by the authority.
He says the council is projected to be several million pounds overspent at the end of the first quarter of the financial year, and says there are big problems with funding for children's services.
"We're projected to be 5 million pound overspend, at this stage of the year, albeit that's less than 1% of the expected budget, but it does hide a growing and worrying trend within children's services. I'm afraid.
That's reporting the overspend of in excess of 10.4 million pounds.
That can't be fudged. I know that there's a national issue there, it's certainly a issue within North Yorkshire. "
Councillor Dadd says he is also worried that a government spending review could make the situation worse.
"Without action, we will have used reserves to the tune of about 57 million pounds by March 2028, and that is before the fairer funding review 2.0.
That will likely give us formula changes and a worsening situation.
I suppose a strong message is be prepared for the most severe budget round that this authority and its predecessors have faced."
Cllr Dadd said there was some good news with North Yorkshire Highways finding some efficiencies.
He said a national pay award settlement with council staff had also been agreed after an “outbreak of understanding between both sides” that he said had given the authority “a little bit of headroom”.
But he added:
“You know what’s £1.4m or £1.5m when you’re looking at a £57m deficit three years hence, but every little helps.”
Gary Fielding, corporate director for resources, confirmed the council was facing “recurring pressures” adding:
“None of these are really new, but it’s just a continuation of those pressures, particularly on people-related services,”
The government launched its Fair Funding Review 2.0 in June with a consultation exercise that finished last week.
North Yorkshire Council is a member of the Rural Services Network (RSN), which lobbies on behalf of rural authorities.
The RSN says council services cost more to deliver in rural areas and has called for the government review to reflect this.
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