Calculation of available resources to fund the revenue budget 2008/09
A crucial part of the budget strategy is to identify the level of resources available to fund our net revenue budget i.e. our net costs after allowing for service income from fees and charges and grants. These resources come from two main sources, (i) the Government via its revenue support grant and the distribution of business rates income from the national pot and (ii) the council tax charge to our residents. For 2008/09 the amount of available resources was calculated by as follows:
Projected council tax income
One of the priorities of the financial strategy is for the council to maintain a policy of low council tax increases. Council tax rises are to be no more than 3% per annum for the council’s services. A 3% increase on the 2007/08 council tax level would produce a 2008/09 council tax level of £1,287.68 for our services (£1,250.17 + 3%).
The expected income from council tax in 2008/09 based on a 3% increase in the charge multiplied by the number of chargeable dwellings is as follows:
| Description | Amount |
|---|---|
| Band D council tax for the council's services in 2007/08 | £1,250.17 |
| Add: 3% based on the maximum increase per budget strategy | £37.51 |
| Band D council tax for the council's services 2007/08 | £1,287.68 |
|
Multiplied by: the council tax base (assumed number of Band D equivalent dwellings) - note this has increased to take into account the considerable increase in new properties in the area. |
67,700 |
| Estimated council tax revenue 2008/09 | £87.176m |
Government formula grant
Government funding provides approximately 59% of the resources required to fund the council’s budget. The Government decides how much it can afford to allocate to local authorities and then distributes it based on an assessment of perceived needs using complex formula. This calculation takes into account information including population, social structure and other characteristics of each authority.
Under the above mentioned arrangements the Government has calculated that the council should receive £128.6 million in grant. However, the Government operates a ‘floor’ to ensure that each local authority receives at least a guaranteed minimum increase in grant year on year (2% for authorities with responsibilities for Education and Social Care services). The cost of implementing this guarantee is paid for by scaling back the grant increases to authorities that are above the ‘floor’. As a result of these rules the council’s grant has been reduced by £3.5 million to £125.1 million.
It should be noted that the above grant includes £5.1 million for the transfer of service-related specific grants into formula grant. This transfer of service grant means that our net budget requirement is increased by an equivalent amount. The year on year increase in formula grant is summarised below:
| Increase in Formula Grant | (Million pounds) |
|---|---|
| Government Formula Grant 2007/08 | 115.6 |
| Add transfer of specific grants into Formula Grant | 5.1 |
| Adjusted Formula Grant 2007/08 | 120.7 |
| Government Formula Grant 2008/09 | 125.1 |
| Increase in Formula Grant | 4.4 |
| % increase in Formula Grant | 3.6% |
Council tax surplus collection in prior years
The council has forecast that it will have a surplus collection of council tax by 31st March 2008. This effectively means that we will have collected more council tax than is required to fund our budget needs. This surplus will be used to reduce the council tax requirement in 2008/09 by £0.9 million.
Total available resources
Based on the above information the total resources available to the council are as follows:
| Source of income: | (Million pounds) |
|---|---|
| - Formula Grant from the Government | 125.1 |
| - Council tax based on a maximum 3% increase on 2007/08 | 87.2 |
| - Collection Fund - council's share of a projected surplus of £1m | 0.9 |
| Total available resources | 213.2 |
Budget assumptions and key service issues
This page was last updated on 19 March 2008
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