SURREY residents are being warned to brace themselves for a cut in services or hikes in their council tax over the next few years because of a massive funding shortfall running into millions.

Both Surrey County Council and Waverley Borough Council have admitted that drastic action will have to be taken to remedy the situation, as the gap between income and expenditure continues to grow.

County leaders are calling on the government to "come clean" about the situation and admit that it will again short-change the county council in the next financial year to the tune of £30 million.

However, the government may yet come up with some extra last-minute cash to reduce the bill.

The Conservative-controlled Surrey County Council is projecting that council tax payers will be left to pick up the bill left by the massive shortfall in the government's grant to the council.

It claims that it will have to find the £30 million if it is to meet the government's spending targets and implement a tax rise of no more than three per cent.

The county council's precept makes up around three-quarters of the overall council tax bill. The borough council, the town and parish councils, and Surrey Police share the rest of the cash.

The current year's average bill in Farnham is £1,212.74.

The county council has already pledged to save £40m in costs over the next three years by cutting backroom support services in a bid for higher efficiency, but it claims that this will not be enough to stave off the difficult decisions.

"The simple fact is that if the government wants large spending increases, it must help pay for them – not leave the burden on the local taxpayer," council leader Nick Skellett said.

"To meet the spending targets we've been set on social care and education, we either need an extra £30 million, higher taxes or cuts to services – whichever way we look at it, the sums just don't add up.

"Unless the government gives Surrey the money it is entitled to, the council faces extremely difficult decisions over what services it will be able to provide next year."

A precept rise of between seven and nine per cent could be on the cards, although it is expected that councillors will keep any rise to a minimum with elections looming next year.

The news is no better at the Lib Dem-controlled Waverley Borough Council, which is faced with a £1 million funding deficit as a result of the increasing gap between income and expenditure.

Increases in the cost of things such as insurance and the waste management contract have increased well above inflation - unlike the government grant.

Portfolio holder for finance and personnel Stewart Edge told The Herald that for the past two years the council has been operating with a funding deficit. but it has been able to plug the gap with its reserves.

But he said that this was a tactic which could not continue into the future and a major review into the council's spending was needed.

He said that the heads of the council's various departments have already been asked to look at ways of reducing their spending in the next financial year without major cuts to services.

Mr Edge explained that the council was hopeful of keeping next year's increase to a small single figure percentage, but that a radical change in the council's services is on the cards the following year.

"At the end of the day we will have to looking at having to make significant cuts to services if we are going to close that sort of gap," he said.

Changes are likely to coincide with the decision over the proposed transfer of the management of council homes, which is expected to be made in 12 month's time.

If agreed, it could reduce the council's workforce by around 30 per cent and present the council with the opportunity for a shake-up.

It could pave the way for huge changes in how the borough provides its services in years to come.

"There can be a massive reorganisation of our services as a result of the housing management changes," Mr Edge said.

However, there was some good news on the council tax front this week when the government dropped a hint that it may, like last year, find extra cash for councils to reduce the deficit.

Previously the government had said that it will not give councils extra cash.