North Yorkshire Council has proposed a council tax increase by the maximum 4.99% allowed by the government.
The council’s proposed budget for 2025/26 would see a rise of council tax of 2.99% and a further 2% precept for adult social care.
It comes after the council warned taxpayers that it believes North Yorkshire has been handed “one of the worst funding settlements in the country” by the government following this year's Budget.
The council said it is facing a £5 million deficit.
The proposed council tax rise from 1st April would see an increase of £92.18 per year for an average Band D property, to a total bill of £1,939.54.
North Yorkshire Council leader, Cllr Carl Les, said:
“All councils across the country are facing immense financial pressures but the funding settlement which we have been handed by the government will mean that we are faced with an even tougher situation than we had expected.
“We are acutely aware that all of our communities are feeling the impact of the cost of living, and we certainly do not want to compound those pressures.
“However, we are now faced with a council tax rise of 4.99% to help to counter the multi-million pound shortfall which we are facing in the council’s budget for the next financial year. If we don’t push ahead with the 4.99% increase, the financial deficit will be even worse.
“The government has pledged to conduct a review of local government funding, and I would urge ministers to ensure that there is a fair deal for all local authorities, whether they are responsible for large rural areas such as ourselves or towns and cities.”
North Yorkshire Council receives the greatest share nationally of the rural services delivery grant with £14.3 million in funding each year.
The £110 million package of funding for councils covering rural parts of England was a recognition from Westminster of the challenges of providing services.
The council has said that the £5 million financial shortfall has been compounded by the “unrelenting demand” for care of older people, working age adults, and children and young people.
It said it spends more than £50 million each year on home to school transport and the policy has had to be revised after costs have "more than doubled" since 2018/19 when it was last reviewed.
Chancellor Rachel Reeves announced in the Budget in October last year that the rate that employers pay in National Insurance contributions will rise from 13.8% to 15% on workers’ earnings from April next year.
The decision has left North Yorkshire facing a predicted £7 million shortfall, even with an estimated £5 million grant from the government to cover the rising cost of National Insurance contributions.
North Yorkshire Council’s deputy leader, Cllr Gareth Dadd, whose responsibilities include the authority’s finances, said:
“We will carefully consider the budget proposals when the executive meets as we want to ensure that we are offering the very best value we can for our residents and businesses.
“However, we are faced with some very tough choices to try to balance our books.
“We are due to have to use our financial reserves to cover the deficit which means that once that money is spent, we cannot recoup it.”
The executive will consider the financial plan for the next financial year before the proposed budget will then be discussed at a full council meeting next month (February) before it due to be adopted.
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