ELECTED members are being recommended to increase council tax rates in Shetland by 4.5 per cent for the upcoming financial year – as the local authority faces a funding gap estimated at £4.7 million.
Meanwhile council officers are also recommending a three per cent increase in housing rents and charges, whilst there could be a reduction in planned maintenance work to partly offset the cost of inflation.
Councillors will make their decision at a meeting on Wednesday.
It comes at a time when Shetland Islands Council (SIC) is grappling with significant budget challenges for 2023/24, with changes to services likely.
A report to elected members says the local authority is facing an estimated funding gap of nearly £5 million in the next financial year.
It said unless further savings or increased income are considered over and above those already proposed, the gap will require to be met from unallocated reserves.
Longer-term financial planning has assumed annual council tax increases of three per cent, but with pay and price inflation causing a greater budget gap than expected, higher increases are options.
The SIC recently issued a survey on council tax options, and the results of this will be provided verbally at Wednesday’s meeting.
But for now councillors are being told that a 4.5 per cent increase will result in extra income of £464,000.
This would mean band D properties would come with a council tax bill of £1,260.61.
Last year elected members went against recommendations of officers and froze council tax and housing rent due to cost of living concern.
In the year prior to that council tax was also frozen after the Scottish Government offered a financial incentive to local authorities to keep rates the same.
Council tax is collected to pay for local services such as waste collection and roads.
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Meanwhile consultation has already been carried out with tenants of council housing regarding a rent rise for 2023/24.
Following this council officers are proposing a three per cent increase on rents and charges – whilst reducing the amount of planned work undertaken, apart from energy efficiency measures.
Around seven in ten people said they would support a three per cent increase.
More than 60 per cent said they would prefer to pay a lower rent increase if it meant planned maintenance was delayed.
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