Central government funding for the LGA is to be cut by 7% next year according to a last-minute decision from the Department for Communities & Local Government.
The department informed the association on Wednesday that 2013-14 funding due to be paid from next month would be £2m less than the £27.8m originally budgeted.
A spokesperson for the LGA said: “This is completely unexpected and the extremely short timeframe makes it very difficult to plan the necessary savings. We have already made more than £16m in cuts over the last four years, reduced our membership subscriptions and put in place plans to make additional savings of £1.5m in 2014-15.
“It is astonishing that the government has announced this cut just two weeks ahead of the start of the financial year.”
DCLG said the decision had been made to cut the LGA’s funding after the department’s own 2013-14 budget was cut by 1% in the chancellor’s Budget announcement, a reduction which the chancellor did not apply to council budgets.
A spokesman said: “As part of the department’s savings for 2013-14 announced in the Budget, funding to the LGA is being reduced by £2m to £27m. The local government settlement is not being reopened. This means that councils can protect taxpayers while working to deliver service transformation.”
DCLG funding, which comes from a top slice of revenue support grant for Wales and England, represents half of the LGA’s income with the remainder coming from sources such as subscriptions, services and rents.
The decision comes at a time when relations between central and local government have been described as “fractious” by Conservative councillors in a letter to the prime minister.
The LGA has also expressed frustration with the government’s insistence that councils can continue to absorb budget cuts following the 28% reductions implemented as part of the 2010 spending review.
Disappointment about apparent backtracking on promises of localism and reform of local government finance have both proved a bone of contention for many within the LGA.
The cut in top-slice, which represents a 3.6% reduction of total income in 2013-14, has sparked fears within the organisation of job losses which would come hot on the heels of a major reorganisation and redundancy programme.
One LGA source said there was “trepidation” amongst staff.