GOVERNMENT funding cuts are the main reason East Devon District Council has a budget shortfall of more than £1m, the local authority claims.
Cabinet members this month considered a report which highlights actions required to bridge the projected £1.256m gap for 2013/14 – 2.3 per cent of the council's £55.8m budget.
The council says it has already made cuts, with the projected spend for the new tax year being £6m less than last year.
Portfolio holder for finance, Cllr David Cox, said the most significant reason for the shortfall was the Government's budget cuts.
Cllr Cox described the shortfall as a "difficult challenge", but admitted it is one many other authorities are facing.
The actions outlined in the report range from minor savings to a more fundamental process required to reshape the budget for 2014/15 and beyond.
Key areas affecting the finances of the council include the reduction of the formula grant pledged to local authorities by the Government.
Over the last two years the council has had a 26 per cent, or £1.8m, reduction in its formula grant.
The sum to be received in 2013/14 is estimated at £4.741m – a reduction of £0.491m. Further reductions are expected until at least 2017/18.
Measures to be taken to address the imbalance include introducing council tax reforms in April.
And in the draft budget the council has agreed a council tax freeze for 2013/14, making itself eligible for a Government grant worth £71,000.
"We're really feeling the impact of the Government deficit reduction policy," said Cllr Cox. "In two years, our formula grant has been reduced by 33 per cent and we know, from what the Government has said, that we should expect further reductions up to 2018, possibly 2020.
"This has had an enormous impact on our funding – you can't take £2.3m out of the pot and not feel the effect.
"We've been coping with the effects of Government budget cuts for the last couple of years and it's been hard because it's meant we've had to cut out any unnecessary fat in the system.
"To deal with this the council has undergone some reorganisation which has led to some people being made redundant.
"Times are hard for normal people," Cllr Cox continued. "We have to look at whether we can reshape and reorganise what we do and try to do it as well, if not better, while not raising council tax. If the budget is agreed then officers and members will need to have a long hard look at the two-year period of review coming up.
"We have a £2m hole we need to sort out. It isn't a huge percentage of the budget but it will be a difficult challenge."