"Profligate" spending by the Liberal Democrats in the first months of office has played its part in the worrying city budget, according to the opposition leader.

Labour leader Coun Dave Merrett said £1.2 million of extra costs have contributed to the potential overspend of almost £2m revealed in the Evening Press yesterday.

But council leader Coun Steve Galloway dismissed the claims as nonsense, saying only £25,000 extra had been spent, on a valuable crimebusting measure.

"Clearly the budget situation must be a matter of concern but part of this lies at the Liberal Democrats' own door," said Coun Merrett.

"They have approved this year £700,000 worth of additional staff expenditure and voted to spend £500,000 extra on city pride initiative out of the general rate fund.

"An unknown amount has also been spent out of the housing revenue fund and frankly this fairly profligate expenditure comes in just a matter of months."

City of York Council workers are looking across the board to make savings in the face of widespread service cuts after an overspend of £1.9 million, about one per cent of the authority's budget, was uncovered.

Coun Galloway has warned that a substantial council tax increase may be necessary.

He said he intended to allow no lowering in the standard of council services and to avoid any cuts that could lead to compulsory redundancies. Coun Merrett conceded that the Lib Dems did face "genuine pressures" on the budget and said the Labour group was willing to work with them to face up to these.

But he said that this year's extra cash spend would "significantly deplete" the reserves so that there will be even less room for manoeuvre and even more difficult decisions next year.

He said the Labour group had worked hard within the budget pressures it faced to make York one of the country's lowest council tax areas.

Coun Galloway today hit back, dismissing the opposition leader's claims as "complete nonsense."

He claimed the Liberal Democrats had spent only about £25,000 on new staff members, on an alleygating officer to tackle crime-ridden passages.

The £200,000 York Pride expenditure the council was committed to had been balanced by savings in the chief executive's department, he said. He claimed several factors had contributed to the budget pressures, including increased costs on providing specialised accommodation for disabled children with severe behavioural problems.

Each child's care can cost £125,000 per year, said Coun Galloway.

Updated: 11:01 Wednesday, October 01, 2003