CITY leaders are facing tough decisions after a "disappointing" Government spending forecast, they said today.

Rod Hills, the leader of City of York Council, said officers were already working to find ways to make up a huge budget shortfall.

The standard spending assessment, announced earlier this week, increases the amount the council can spend to £136 million up by £7.9 million.

But the amount of Government grant has risen to only £90.7 million leaving a shortfall of more than £35 million.

If the Council Tax stayed at current levels, estimates are that an extra £4.7 million would have to be found.

This will have to be met through service cuts and increased taxes.

Councillor Hills said: "It is disappointing and we have very considerable pressures on the budget, not least to meet growing demand in social services.

"The spending assessment is much as we had expected, and it doesn't help us very much. We have some very tough choices to make."

Coun Hills told the Evening Press last month that Council Tax rises were inevitable, and cuts in services were going to be hard to find because they had been cut in previous years.

The Liberal Democrat finance spokesman Peter Vaughan today criticised the spending forecast, which he said put York at the bottom of the league for funding services.

And he claimed Government grants were increasing at half the rate that Council Tax bills in the city were going up.

He said: "Once again, local residents face paying for central Government's repeated failure to put York's finances into better shape.

"The 2002-03 grant allocation means that Whitehall's contribution is due to grow at half the rate to be paid by local Council Tax payers."

Updated: 09:02 Friday, December 07, 2001