Shetland Islands Council will have to draw an additional £2.8million from its reserves in the next financial year to offset the cut in its core funding from the Scottish Government.
As expected, councillors also plan to use new powers to raise council tax by the maximum three per cent as part of their efforts to balance its budget.
Council house rent will also go up by two per cent plus an additional pound per week for every one and two bedroom property in the isles.
SIC leader Gary Robinson said the council is currently “drawing more than is sustainable”, but he also believes it is heading in a “direction to getting back to a sustainable budget”.
Councillors will be asked at Monday’s policy and resources committee to recommend that the full council, which meets the following week, approve these the measures as part of the local authority’s budget for the next 12 months.
Members of the committee will be told that £2.753m of reserve money should be used as a one-off after the council was told it would receive around £2.8 million less from the government than it got this financial year.
However, a report by finance manager Jonathan Belford says using the reserves was nevertheless “affordable” due to an expected announcement from the government on fairer funding of the SIC’s inter-island ferry service.