Fifers could be faced with a hike in council tax next year to help plug an estimated £19 million black hole in the local authority’s budget.
Local government group COSLA has warned current legislation means any deficits would have to be met through an increase in council tax rates for 2021/22.
A 50% rise would cover the estimated £739m of “additional costs” racked up as a result of Covid-19 across Scotland, in a single year.
COSLA concedes such a rise would not be feasible and has called for council tax legislation to be changed so any shortfall can be repaid over a period of time “significantly in excess of one year”.
A report to Fife councillors has put the region’s Covid-19 related bill at an estimated £86m – up £8m in just one month – and there are growing fears taxpayers may have to bear the brunt.
Council co-leader David Alexander insists any suggestion of large council tax rises would be a “worst case scenario” and is optimistic the situation will improve.
Last week’s report said mitigating factors should bring the estimated shortfall to nearer £19m.
“Much of the numbers quoted regarding Fife are still estimates but the more time financial staff have, these estimates become actuals,” he explained.
“The gross costs from the pandemic are really horrific. The first stab at these costs came in at £78m. The second was £86m. This cost could rise again as we come closer to opening up and the kids get back to school.
“However, the first stab net cost was £51m and this was reduced to £19m in the second report. It’s the net cost we have to cover. That is a good trajectory.
“It is still very early in terms of worrying about council tax bills – that decision is seven months away and lots can happen.”
Fife finance executive director Eileen Rowand confirmed a deficit position would have to be recovered within one year “as things stand”, but she acknowledged it would be “unrealistic” to do so.
“I think the ask from COSLA is 20 years – it’s more likely to be three or four years,” she added.
Describing the prospective rise as “eyewateringly large”, Labour councillor Altany Craik said: “The number coming down to £19 million is a welcome sign but we’re nowhere near that.
“It’s going to be a difficult circle to square.”
Liberal Democrat councillor Tim Brett said: “Facing a deficit of this size and level is unprecedented.
“My concern is that if we do not take action, the longer we leave it the harder it’s going to be.”
A Scottish Government spokesperson said: “To date, the Scottish Government have committed almost £330m of additional funding to local government for COVID-19 measures and Scotland’s councils have received £405m in advanced payments so far this financial year to assist them with their cash flow, and by the end of July this will have risen to £455m.
“We will continue to work with COSLA and local authorities, as well as pressing the UK Government for urgent additional funding and flexibility for our partners in local government.”
