Cheshire East Council currently has general reserves of £14.1m and if it was unable to reduce its shortfall by the end of the financial year, it would need to cover it from the council’s reserves.
Meanwhile, its budget for the next financial year is also forecasting an overspend of £11.7m.
It would move funds from its earmarked reserves – which were set aside for specific or predicted spending – to cover this.
A total of £8.7m of spending in preparation for the now-cancelled HS2 line to come to Crewe was also set to come from the earmarked reserves.
By the end of this financial year, the council would have reserves of £25.3m but with the spending from next year’s budget, the authority would be left with total reserves of £3.8m.
Mr Thompson’s report said this would 1% be of its expenditure.
“This position is clearly unsustainable as a 1% variance in spending could trigger the requirement for a s.114 report,” the report said.
It also said the council “must address the current trend of overspending”.
