Paul Yallop, cabinet member for resources, told the Herald this: "We have already identified a major deficit of £930,000.

"We are looking at a package of efficiency savings, and there may be more need to look at low priority services.

"We are trying to keep the impact on front-line services to a minimum."

Cash deposits

Asked if the crash in share values had affected the borough's finances, Mr Yallop replied: "Most of our deposits are cash deposits.

"We have treasury management consultants, and we are obviously reviewing these deposits."

Mr Yallop also said he was not aware the current crisis threatened any of the council's projects to develop the town's attractions and business base.

West Sussex County Council says the shares crash will not affect next year's council tax demand.

Market turmoil

Louise Goldsmith, the county council's cabinet member for finance and resources, told the Herald: "The county council is not immune from the turmoil in markets and the downturn in the economy.

"Increased inflation, particularly in energy prices, is an extra burden and any general increase in prices and feed-through to wage increases would have a serious impact on the county's services.

The current stagnation in house building is hitting projected council tax revenues and a tax base that is not increasing as quickly as anticipated means that any level of council tax raises less revenue to fund services."

Asked about the effect on the local authority pension fund, Ms Goldsmith said: "The current falls in the stock market affect the value of the pension fund today, but will have no impact on council tax in the coming year.

Pension contributions

"Pensions are a long-term business and markets will recover from the current volatility.

"The next valuation of the pension fund affecting employer contributions (and therefore council tax) will not take place until March, 2010, and come into effect in April, 2011, by which time markets could have recovered significantly from current levels.

"One symptom of the credit crunch has been higher interest earnings on the county council's cash deposits with banks, which goes some way to off-setting cost increases.

"In terms of council tax for next year, the county council is committed to minimising any increase, well aware that the difficult financial outlook is affecting all our residents.

"Like everyone else, the county council will have to cut its cloth to fit the current circumstances."

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