YORK is facing another tough round of cuts in council services next year to meet a cash shortfall of more than £3 million.

The likely cuts - coming on top of more than £4 million cutbacks in this year's budget - have been revealed in a City of York Council report summarising the authority's financial position.

The officer's report reveals that York now gets the third lowest level of Government cash support of any unitary authority.

According to the Liberal Democrats, the report identifies ten major areas where economies might be expected, despite a likely council tax increase of at least 4.6 per cent.

These include several important areas of social services, including home care, services for the physically and mentally handicapped and elderly persons' homes.

But the Liberal Democrats are suggesting there should be a city-wide consultation on a number of options - and even a referendum of all voters - to let residents have their say on next year's budget.

Liberal Democrats leader Councillor Steve Galloway said the council's Shadow Executive was meeting this afternoon to start looking at new ways of economising and raising funds.

It wanted to look for specific economies in several areas, including administration support costs such as marketing and communications and the costs of servicing a "burgeoning" number of quango and partnership bodies. It also wanted to generate new sources of income, for example from advertising.

But the council's Labour leader, Councillor Rod Hills, attacked the Liberal Democrats' suggested solutions to the problem, saying the funding for partnership bodies played a vital role in issues such as attracting jobs and fighting crime. "Do they want to cut funding to the Inward Investment Board?" he asked.

He confirmed more cuts were on the way, but said Labour wanted to protect front-line services.