YORK is facing a financial crisis due to a £32.3 million black hole in the council's budget, the leader of its opposition group has warned.
Liberal Democrat leader Cllr Nigel Ayre said the Labour administration needed to say if plans to deal with it would see council tax hiked by £240, cuts or borrowing.
Cllr Claire Douglas, the council's Labour leader, said she was committed to protecting services residents needed the most and accused the opposition of distracting speculation about household bills.
A Government spokesperson said the £198 million being granted to York in the next two years was 9 per cent more than its share of national funding for councils in 2024-5.
It comes as the council is set for talks with the Government about its financial options following warnings that it will face a budget gap worth £32.3 million by 2030.
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The council's executive is set to receive an update on the authority's finances on Tuesday, November 3 as work gets underway on its budget for 2027/8.
Councillors have been asked to authorise officials to approach the Government to begin discussions about the authority's position.
A report to the executive stated the council was set to see some of its most significant financial challenges to date and addressing them would be extremely difficult for residents.
It added a combination of rising costs, below average local council tax rates and national funding reforms set to make York the lowest-funded local authority per head were to blame.
Officials stated budgets could either be balanced through cuts which could see some services stop entirely or support such as Government loans could be sought to buy time for changes.
Labour finance spokesperson Cllr Katie Lomas said all available options would be explored but warned there would be no easy solutions.
Liberal Democrat leader Cllr Ayre said residents needed to know what the situation meant for household budgets.
He added his group estimated £240 hikes to yearly council tax bills for Band D homes would be required unless the administration were prepared to make savage cuts or borrow.
The 13 per cent hike could only be enacted after backing through a local referendum or getting Government permission to raise levies beyond 4.99 per cent legal limits.
Cllr Ayre said: "Labour has left York facing a financial crisis.
"Will Labour impose council tax increases that could leave households paying £240 more, will they pursue savage cuts that will mean some services will stop altogether, or will it take out a Government pay day loan that pushes the problem into the future, and leaves taxpayers paying for it for years to come?
"Labour must explain what options it is considering.
"Residents should not be left paying the price for a Government that has failed to stand up for York and a council leadership that defended its decisions."
Labour council leader Cllr Douglas said the hugely challenging financial situation facing the council had been years in the making.
The council leader added they would continue to make the case to the Government for a fairer funding deal.
Cllr Douglas said: "While York's council tax is a long way below the national average, Liberal Democrats' plans for a 13 per cent council tax increase is speculation designed to distract whilst Labour gets on with the hard work of finding a lasting solution.
"York is not on its own in this situation, with other councils hit by rising adult social care demand and reduced Government funding in the same boat, so a wider solution needs to be found.
"We'll keep residents informed of key developments as they emerge between now and setting the city's next annual budget in February, remaining keenly aware of current cost of living pressures for residents as we do this."
The Government's spokesperson said their Fair Funding reforms were fixing an outdated system so money goes where it is needed while ensuring no area faces a financial cliff edge.
Whitehall's position remains that councils are expected to manage their finances effectively and protect taxpayers.
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