A 4.95% COUNCIL tax increase is being planned for Merthyr Tydfil residents next year.
Budget proposals for 2026/2027 due to go before cabinet and full council on Monday, February 23 include a proposed budget of £183.69m.
On council tax, the proposals say that the initial provisional local government settlement would have meant a further increase in the level of council tax was needed for next year but in light of the final settlement, a 4.95% is proposed which will “avoid excessive increases in council tax and maintain as many services as possible.”
This results in a band D council tax of £2,186.33 for 2026/27 and equates to an additional requirement of £103.12 for 2026/27, equivalent to £1.98 per week.
The weekly increase ranges from £1.32 at the lowest band A to £4.63 at the highest band I.
This results in a net reduction in council tax levy income of £21,000.
The report says that as 84% of the properties within the county borough are valued at bands A to C, a significant proportion of council taxpayers will be liable to payments less than £2,186.33 and it mentions the council tax reduction scheme.
In terms of cuts, the budget plan includes proposals to remove £3.58m from the revenue budget next year made up of £1.69m permanent savings, £34,000 in the use of one off service earmarked reserves and £1.85m of temporary savings which are not sustainable in the medium or long term.
No additional efficiencies are being asked of schools across Merthyr Tydfil, the report says.
But it adds: “Schools across Merthyr Tydfil continue to face significant financial pressure through pay, pension and other costs.
“Due to the ongoing financial challenges faced by local government the draft budget proposal does not provide the funding required to fully support the schools funding formula.
The report highlights the financial pressure schools face particularly in relation to the increased number and complexity of additional learning need.
“Governing bodies, like other council services, will need to consider how they manage these resources and deliver a budget that complies with the scheme for the financing of schools.”
The report also mentions pay pressures (£534,000) and £2.6m in unavoidable additional demands resulting from service financial pressures such as demographic growth, legislative changes, new initiatives, loss of income and changes to grants terms and conditions.
The final local government settlement from Welsh Government resulted in a funding increase of 4.7% for Merthyr Tydfil which reduced the budget gap by £7.74m.
When these are taken into account along with adjustments to the council tax base (£146,000), employee costs reductions (£2.35m), capital financing costs (£1.35m), an accountancy review of assumptions (£1.18m) and the 2025/2026 transformation programme (£354,000), the council is left with a budget gap of £509,000.
To allow for timely formal notification of increases in fees and charges, the CPI rate of inflation projected on January 1 before the start of the new financial year is used so for 2026/27 that figure is 3.4%.
For all services, the council will seek to do this where possible from April 2026.
Extra budget adjustments from updated information include a £300,000 reduction in additional services demand.
In-year savings of £325,000 are needed for 2026/2027 as part of the council wide transformation programme.
The final settlement also provides additional grant of £10,000 because of minor settlement formula changes.
Transition from the Shared Prosperity Fund programme to Local Growth Fund has resulted in projects ending or being reduced, the report says.
Full council earlier this month approved a contribution of £427,000 from Biffa Profit Share to mitigate against the loss of SPF for 2026/27 only.
The proposals are that £532,000, made up of £427,000 funded from the Biffa Profit Share and £105,000 funded from the council’s 2026/27 revenue budge, is allocated to support Shared Prosperity Fund legacy projects.
When taking into account the proposed council tax increase, these proposals close the remaining budget gap.
