EAST Hampshire District Council is facing financial crisis unless it takes action now to deal with an estimated £750,000 funding shortage next year.

And councillors are being warned it could mean a bigger rise in council tax next year.

It could also mean a hike in car parking charges throughout the district, a re-think on concessionary fares and the councilÕs garden waste collection service, as well as a review of senior management staffing.

In a report to members of the councilÕs Cabinet, which was set to meet on Wednesday night, head of financial services Bill Price was due to ask councillors to increase this yearÕs revenue budget by £290,000.

In his report he said that it looked as though there would be another shortfall of £744,000 spending money next year and asked members to look at proposals for a new financial strategy to take the council up to 2008.

Mr Price reported that the spending shortfalls were predicted after looking at several factors including the impact of continued reduced investment earning and a possible cut in the level of support from central government.

And he warned that it was becoming increasingly difficult to keep to the councilÕs political objective of maintaining services at their present level and keep the council tax increase to within 2.5 per cent.

Councillors were set to hear it was proposed to deal with the £290,000 shortfall this year by using £125,000 underspent in last yearÕs budget and find savings of £165,000 after another look at this yearÕs budget.

He said the money was needed after a rephasing of local plan expenditure, a reduction in income from land charge fees and the need to provide more homelessness payments as increase demanded.

But Mr Price reported: ÒThe shortfall in 2004 to 2005 is of greater significance.

ÒThe continuing low levels of interest rates with the further prospect of a fall this year will undoubtedly bring downward pressure on the councilÕs investment earnings.Ó

In addition there was uncertainty over the future levels of government grant. New grant formulas were being used by central government to calculate figures using a Ôfloors and ceilingsÕ concept.

Mr Price said: ÒBased on the new grant formula EHDCÕs assumed grant entitlement is below the floor and if it was removed this would result in a loss of grant approaching £500,000.Ó

The district council tax has been kept to the governmentÕs inflation target of 2.5 per cent over the last four years. But Mr Price warned: ÒIn the medium term it is now becoming increasingly difficult to comply with the councilÕs political objective to maintain services at their current level and keep council tax increase to within 2.5 per cent.

The head of financial services was set to ask Cabinet on Wednesday to support proposals to deal with the three quarters of a million pound funding shortage next year. They included a review of the garden waste service, the stopping of the architectsÕ enabling service, and reviews of car parking charges, concessionary fares and senior management staffing.

In the longer term Mr Price was set to ask members of the Cabinet to agree a number of principles to be adopted in the forming of a new financial strategy to take the council to 2008.

They included an aim: ÒTo keep annual council tax increases as low as possible without undermining the councilÕs ability to meet its overall priorities as set out in its corporate action plan. Such increases, where necessary, to be kept within the government guidelines for council tax increases.Ó

Council leader Elizabeth Cartwright told The Herald that members were planning to ask all service departments to look at their budgets for next year very carefully, especially at contingency figures.

ÒSome departments build in contingency figures which we would hope to strip out by having one central contingency fund and we hope to make some savings by doing this.Ó

She said a review of car parking charges was due. ÒWe havenÕt had one for four years and we also want to review concessionary travel to target it where it is most needed.Ó

Mrs Cartwright has long held the view, along with other councillors, that some people currently eligible for concessionary fares did not urgently need help.