Somerset Council has been told by the government that it cannot put up its share of council tax by 10%.
The authority had sought permission to go above a 5% cap to help it deal with its ‘financial emergency’ but that has been denied this week.
It means the share people in a Band D home pay will go up by £82 a year instead of a proposed £160.
The government says it wants to “protect local taxpayers from excessive council tax increases” and councils should consider the pressures “many households” are facing.
Council leader Bill Revans says: “The decision is disappointing as ultimately we need our council tax to be sustainable.”
“While no one wanted to raise council tax, it was the only option we had to address a broken system where our costs are rising faster than our income.”
“We have been prepared to take difficult decisions locally to minimise the impact on our communities. However, we are now reliant on the Government granting a capitalisation direction.
“This would be another short-term measure and is not the long-term solution which is urgently needed.”
Somerset Council has said it needs to find £100m to close a budget deficit. Cuts to services totalling £35m have also been proposed.
Somerset Council has also asked parish and town councils to step in to pay to keep some services running, such as CCTV and public toilets. Town and parish councils are not limited in how much they can increase their council tax by.
A 23% Council Tax hike in Burnham-On-Sea and Highbridge was approved by the town council last week for its share of the council tax.
Somerset Council says it can avoid going effectively bankrupt in the near future. It thinks the government is going to let it use borrowed money, and money from selling off buildings, to pay for day-to-day services just for the next year.
Cllr Revans also said yesterday: “We have been having conversations with our political equivalents in government and we are confident there will be a positive outcome.”
The council’s budget will be formally confirmed when it is voted on, on 20th February.