FINANCE chiefs faced with finding £1.3million savings to avoid a massive council tax rise have defended their £16million bank balance.Suffolk Coastal has tough decisions to make over service cuts.

FINANCE chiefs faced with finding £1.3million savings to avoid a massive council tax rise have defended their £16million bank balance.

Suffolk Coastal has tough decisions to make over service cuts. Big price rises for parking, swimming and sports centres are all on the agenda to balance the books.

But it is refusing to eat into its £16million reserves to keep council tax down, claiming the money bank is regularly raided to fund projects throughout the borough.

Cabinet member for finance David Smith said: "The government would take an extremely dim view if we raided our remaining reserves as a gimmick to keep our council tax bills artificially low for one or two years.

"A London borough has been severely criticised for needing a possible 40 per cent rise in its council tax bill to balance its books after having using its reserves to cut its bills by 25pc this year.

"Our residents can be assured that we not going for any similar short-term gains, but will instead continue to manage our reserves for the long-term benefit of the district while maintaining our aim of keeping council tax as low as possible.

"Our reserves will not last forever, and we will need to adjust our spending plans in the future, but we will continue to maximise their benefits for the district."

Council finances received a massive boost 12 years ago of about £22 million when it transferred its housing stock to a housing association.

Tax payers have reap the benefit through interest earned from the cash.

Mr Smith said: "This income has inevitably fallen as interest rates have dropped, but this year there will still be an estimated £1m worth of services funded from this source – money which otherwise would probably have had to come from council tax payers."

Reserves have been used over the last decade to fund community projects, coastal protection, the building of nearly 800 affordable homes across the district and 2,500 grants to help improve privately-owned homes.

Some of the district's town centres have also been spruced up and new facilities like Brackenbury sports centre provided.

Mr Smith said: "This year alone over £3m will be spent improving the quality of life in the district with much-needed improvements to Deben Pool and Felixstowe Leisure Centre, as well as urgent coastal protection works, replacing old council vehicles so we can provide more efficient services, and improving play areas.

"Using reserves is a prudent way of financing this expenditure – the alternative would have been to borrow money that would have to be repaid over a number of years with an on-going effect on council tax bills.

"We have prudent plans for using just over £6m of our reserves up to April 2006, which will mean there is a similar amount to be used as part of this council's planning for the future."

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