Interest on borrowing for projects such as the Kings Quarter is a "significant risk" for Gloucester City Council as it tries to balance its 2024/25 budget.

It amounts to £0.55m for 2024/25 and is a "key pressure" on finances alongside homelessness prevention costs of £0.65m and external audit fees of £0.11m.

The budget is due to be debated at a council meeting on Thursday (Feb 22) and includes a 2.99% council tax rise- the same as last year's increase.

Its five year money plan is also due to be approved and reveals it expects to enact the same increase every year until 2029.

For this financial year it will result in an average band D property owner being charged 12p more a week and paying £4.42 for services provided by the city council.

The ruling Conservatives said they continue to provide "value for money" despite the national squeeze on finances.

But the Lib Dem opposition has slammed the budget as "depressing" with reserves having to be "raided" and no growth in service provision for residents.

In total the local authority will collect £9.065m in council tax- £333,000 more than last year and will retain £7.2m in business rates.

However, it will still have a £307,000 shortfall in the £17.68m needed to run council services.

It plans to plug this with £300,000 of efficiencies-such as the £85,000 saved by relocating its in-person appointments to Eastgate Shopping Centre.

The council will draw £400,00 from its £4.266m of general reserves to plug the final £7,000 gap and pay £393,000 into its General Fund.

Cllr Richard Cook (C, Kingsway), leader of the council, said: "The council continues to provide value for money services while still in very challenging conditions for local government finance.

"We are continuing to deliver major projects such as the Forum development and are soon to move onto another major regeneration scheme in the Greyfriars area of the city."

Budget papers reveal it plans to spend £36.27m on capital projects in 2024/25 with £18.5m going to The Kings Quarter regeneration, which includes the Forum and £1.4m to the Greyfriars regeneration. This will be funded through £27.25m of borrowing, £6.35m of grants and £2.668m of capital receipts.

The budget went before the overview and scrutiny committee and cabinet earlier this month and was also put out to public consultation for eight weeks - with 147 responses received.

It will now go before a meeting of the full council for approval.

The report states: "One significant risk continuing for the council is the high cost of borrowing since June 2022.

"With the council's ongoing Kings Quarter regeneration programme in progress there remains risk of increased revenue pressures.

"In 2024/25 these risks have been mitigated through the use of Levelling Up Funding and income as part of the development.

"Forecasts do expect borrowing costs to return to more sustainable levels in 2025/26 however this is something our treasury management will need to monitor closely. If this is not the case future plans will need to address these interest rate pressures."

Leader of the opposition, Cllr Jeremy Hilton (LD, Kingsholm and Wootton) called the budget "disappointing and underwhelming".

He said: "There is a large overspend in the current financial year, which has meant that the Tories have raided the council's reserves to balance the budget for 2024/25. It's a poor legacy to hand over to the new council that will be elected on 2nd of May.

"They are also putting up the council tax again by 3% and fees and charges by 6% to raise income to cover the deficit they have incurred. No growth in service provision is planned. It's depressing."

He questioned why audited accounts for the last two financial years still haven't been signed off as residents need to know the "true state" of the balance sheet ahead of the elections.

Cllr Cook said this was due to a national problem with more than 770 local bodies awaiting outstanding audit opinions as of December 2023.

He said: "Cllr Hilton's statement is typically misleading because he is highlighting national issues which are outside of local control and are affecting all councils."

He said the main budget pressure was spending on temporary accommodation to help the increasing numbers of families affected by cost of living issues and growing numbers of refugees and asylum seekers.

In November Punchline reported the council had a £1.1m budget overspend  due to spiralling costs for housing people at risk of homelessness.

It approved borrowing of up to £5million so it can buy buildings to use instead of relying on expensive hotels.

Cllr Cook said the council had been "prudent " in recent years to save money for a "rainy day".

It hopes to further increase its General Reserves as it faces "significant uncertainty from 2026/27" according to the budget papers.

This is due to a predicted "significant reduction" in retained funding from business rates due to the Government Fair Funding Review due to take place before 2026.