Sunderland City Council leaders say spending pressures and shortfalls, including unresolved questions over the national funding of social care, mean the authority is facing an estimated budget gap of £51million over the next four years.
They say proposals to tackle the budget gap are being developed, including ‘service staffing reviews that could see reductions of 60 posts’.
Senior councillors on Sunderland’s ruling cabinet will look at the latest financial information at a meeting on December 7, with a consultation on spending plans with residents, businesses and other stakeholders due to begin.
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Further decisions on budget proposals will be made in February 2022 with the budget agreed at the beginning of March.
The Government’s funding plans for local government assume that council tax increases will be 2% for 'core' services with an additional 1% for the Adult Social Care precept.
Further funding details are expected from the Government in coming weeks.
Cabinet Secretary, Councillor Paul Stewart said: "To begin to address the budget gap and the uncertainty around support from the Government, we have savings proposals of £5.8million to help address the £18.9million gap for 2022/2023, and work is continuing.
"Given the size of the gap and the uncertainty regarding Government funding generally, including social care reforms, we are also looking at using the reserves that we have set aside to help balance our financial position.
"Current assumptions are that this could be up to £9million in each of the next three years.
"I want to make it clear that we are looking at the use of reserves at an unprecedented level due to the failure of Government to provide the resources we need just to help maintain existing and day-to-day services. These are reserves which could, in other circumstances, be used for longer-term projects that would benefit our communities.”
He added: "Proposals in relation to council tax and social care levy increases to support the budget position will be considered as part of the final budget setting proposals in February 2022.
"The budget planning at this stage assumes a Council Tax rise of 3% comprising of a 2% increase in core council tax and a 1% increase in the Adult Social Care Precept. This is in line with what the Government expects us to pass onto our residents."
Cllr Stewart said Sunderland's council tax currently raises around £16 for every £100 in the budget and is the lowest in the North East region.