A 2.5 per cent rise in council tax could still be on the cards for next year.
Preparations are under way ahead of next year’s budget, due to be announced in February, and IW Council leader Cllr David Pugh reiterated they were working to a target of 2.5 per cent.
But director of finance David Burbage told councillors at the overview and scrutiny meeting on Thursday last week they would need to find around £5 million in savings next year.
He said they could come in a number of ways, including cutting staff, selling buildings and increasing charges.
The council is tackling a projected overspend of £3.5 million this year, from areas including highways, landfill tax, the floating bridge and social services.
"The council cannot afford to overspend by such an amount and, as in previous years, management action is being taken to reduce these pressures, contain spending in other areas and implement savings where this is possible," said Mr Burbage.
Next year, the council is committed to spending almost £1 million on PFI set-up costs, followed by £1.8 million the following year, contributing to the total bill for set-up of more than
£7 million.
It is due to borrow £40 million, between 2008/9 and 2011/12 to pay for the capital programme.