Council tax bills are set to rise in Gateshead from April after politicians approved next financial year's budget.
Gateshead Council’s budget proposals were voted through at a Gateshead full council meeting on Thursday.
This means council tax bills will rise by 2.99%, which includes a 1% precept for adult social care services.
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This will see households in Band A properties, which are the majority of the borough, will pay an extra 73p a week while those in Band D properties pay £1.10 more.
However, the borough will continue with the council tax support scheme which means around 12,000 of Gateshead’s poorest residents pay no more than 8.5% of their liability.
In the financial year 2022/23 Gateshead Council needs to save £5.8m, which it will cover using temporary funding from the “budget sustainability reserve”.
This will give the authority time for a fundamental review of the budget and develop a new approach to budgeting to make the council more sustainable in the future. Despite using reserves, the council will still need to make savings of £45m over the next five years.
Gateshead Council leader Martin Gannon and leader of the Liberal Democrat opposition Jonathan Wallace agreed to not debate party politics which meant the budget was heard and voted through in less than 15 minutes.
Coun Gannon said: "Despite the fact since 2011 the council's budget has reduced by £179m as a result of a 56% cut in grant support from central Government we still face the prospect over the next five years of a £45m gap over in being able to provide services to the people of Gateshead.
"In January we met and we agreed the council's budget which briefly gave the scale of the problems we are facing we agreed to deploy our available reserves over the next three years starting in the next year.
"As I explained at the time that doesn't necessarily mean the issue goes away because you can only spend reserves once.
"Once spent they're not there and its not sustainable way of supporting the budget and we still face the prospect of having to remove £45m from the budget to get ourselves to a position of a sustainable budget.
"Part of doing that will mean doing a fundamental review over the next two years of every single line, every single penny, of the council's budget.
"We will do that in line with policy objectives which we have set down as tackling poverty and inequality targeting our support to the most vulnerable and where it is most needed, spending upfront to avoid costs down stream which is not only economically the right thing to do but morally the right thing to do.
"In a very tight financial situation we're continuing with the very generous council tax support scheme which costs the council about £24m a year and supports just short of a quarter of households in Gateshead - about 12,500 households of working age.
"We are conscious and aware of the great stress in Gateshead financially at the present time something like a fifth of our children are growing up in poverty the prospect of removing £43m from the council's budget as the leader of Gateshead Council I would say the whole model of local Government finance is effectively permanently broken.
"It is impossible to deliver the range of statutory services expected of a local authority with the level of support we're getting from central Government.
"That's impossible in Gateshead but Gateshead isn't a unique case."
The borough plans to spend £5.9m on adult social care and £2.9m on children’s social care to meet increased demand and spiralling fees.
Meanwhile the council wants to invest £1m to to continue social work in schools and deal with increased demand in children’s social care looked after children.
It also wants to invest £400,000 in parks and open spaces as well as £600,000 to fund a social worker academy.
This academy would tackle increased work loads and the difficulty the authority has recruiting experienced social workers.
Additionally £200,000 will be spent on extending “early help” posts which support families at an earlier stage to stop them needing social services.
Coun Wallace agreed with the leader's bleak warning, but said that the spiralling cost of living meant that the Lib Dems would be voting against a council tax rise.
He added: "The system of financing local Government is broken. Unfortunately no Government for the last 30 or 40 years has managed to fix it and that's Governments of all political persuasions; Labour, Conservative and in our case the coalition.
"None of us have managed to put right the funding of local Government. Part of the problem of local Government is it relies on a council tax system which is actually an unfair form of taxation because it has a heavier burden on people from lower income households and that needs to be changed as well, and that's one of the reasons we're voting against it today.
"We are now going through a cost of living crisis - I drove past a garage on Team Valley Trading Estate today and I saw the price of petrol - £1.55 a litre in a few weeks time we will regard £1.55 as being cheap - I expect us to reach £2 a litre some time soon.
"That's an illustration of the problem that we are as a nation going to face over the coming months - probably coming years.
"We are all going to be squeezed by rising prices - that's one of the reasons why we felt that this time was not the right time to be increasing council tax."
