Whitby Town Council's precept will rise by 4.87% after councillors rejected plans for a higher increase to tackle finance challenges.
The Town Council has been told by auditors that it has insufficient cash reserves. The Council has around £30,000 in the bank with auditors suggesting that figure should be somewhere between £150,000 and £250,000.
To try and address the issue councillors were presented with a budget for next year which would have seen it's council tax precept rise by 9.18%, that would have given the council revenues of £405,000 and provided £39,000 to add to the authorities reserves.
But at a Town Council meeting this week councillors rejected the budget before entering in to a discussion about what level of increase would be acceptable. The meeting decided that any increase should not exceed the 4.99% increase being implemented by North Yorkshire Council.
Councillors settled on a 4.87% increase which will generate £389,000 of revenue and £16,000 to add to the council's reserves.
Town Clerk, Adam Chugg, told the meeting that the reserves do need to be increased over the coming years.
The Clerk said the council should ideally have reserves of at least £150,000.
In a report to the council officers reported that:
"The current level of reserves is significantly below the required amount. It is recommended good practice to have reserves between 30 and 50% of turnover. For Whitby Town Council this means between approximately £150,000 and £250,000.
The current level is around £30,000.
One approach is to seek to increase them gradually between now and the next election of May 2027.
This would mean raising reserves each January - 2025, 2026 and 2027. A start needs to be made now, and then more work can be done to strengthen the reserves through this period"
“Looking at auditor recommendations it would be sensible to add £170,000 to reserves in the next three years to bring reserves to £200,000 or approximately 40 per cent of turnover – this gives us a starting point.”
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