Under the draft settlement announced by the Scottish Government, the main funding Orkney Islands Council receives to run services will be £77.5 million for 2020-2021.
Initial analysis suggests that this is a cash increase of £0.6 million compared to last year, but when inflation is taken into account it means a real terms reduction of £0.7 million.
The Council’s funding will also include ring-fenced amounts to meet Government commitments, including an expansion in early learning and childcare and increases in teachers’ pay.
Transport Scotland has announced that in addition to OIC’s share of the local government settlement, it is providing £11.5 million for local authority ferry services for 2020-2021, an increase of £1 million on the current financial year.
Transport Scotland says decisions on the precise allocation of this funding will be taken in due course. The Council received £5.3 million for 2019-2020 from an overall allocation of £10.5 million.
OIC Leader James Stockan said: “The fine details of OIC’s share of the settlement still needs to be gone through before we have a completely clear picture of our financial position for the year ahead.
“The increase in ferries funding is welcome, but our concern is that our allocation is likely to be insufficient to cover the full operating costs of £7 million for Orkney’s inter-island service over the year ahead.
“We will continue to press for full and fair funding and will be looking for support from across the political spectrum as the budget setting process at Holyrood progresses.”