Powys County Council is facing an estimated budget gap of £10 million in 2027/28, according to a financial planning update.
The projected gap has increased from £9.7 million in February, and the council is forecasting a cumulative shortfall of £51.8 million over five years.
The update will be considered by the Finance Panel on 15 October and by the Cabinet on 20 October.
As well as general inflation and rising interest rates, the pressures include nationally agreed pay awards, energy and borrowing costs, and increasing demand for social care, homelessness support, improvements in education and provision for learners with additional learning needs.
The council’s financial model currently assumes a 5% Council Tax increase, but no decision has been made. The council said the figure is for planning purposes and the final proposal will consider affordability for residents alongside the need to fund services.
The council said the underspend reported at the end of the last financial year does not remove the challenge. It resulted from unexpected Welsh Government funding, a small increase in income and savings from service efficiencies, and because that funding and income cannot be guaranteed each year, the council must plan its 2027/28 budget on the resources it knows will be available.
The council is continuing to review how services are delivered, including simplifying processes, using digital technology, managing demand, increasing income and making better use of buildings. It said it may be necessary to consider which services it can afford to continue to deliver.
Councillor David Thomas, Cabinet Member for Finance and Transformation, said: “The financial challenge facing the council is significant. Costs are rising, demand for essential services is growing and there is considerable uncertainty around future funding.”
Cllr Thomas added: “These are early estimates, not a final budget. Setting the budget is about carefully balancing the need to protect the services people rely on with the need to limit Council Tax increases wherever possible. We will continue to review the figures carefully and work with councillors, communities and partners as our plans develop.”
The council’s assumptions will be updated as more information becomes available from the UK and Welsh governments, ahead of the final budget for 2027/28.
