A £26,000 hole has appeared in Dartmouth Town Council's budget.

The council had been due to vote on its budget for 2012-13 at its meeting this week, but was forced at the last minute to delay the decision.

The hole should have been filled by the VAT savings the council hoped to make by handing the running of the town's new look community cafe over to Dartmouth Caring.

But one day before the council met to approve its budget, the charity said it had not been officially asked to take on any lease to run the cafe building, which it rents one and a half days a week.

Council clerk Chris Horan admitted the £26,000 VAT saving had been built into the coming year's budget before Dartmouth Caring had even been 'formally approached' over taking on a lease – but he declined to comment further.

Dartmouth Caring chairman Dee Nutt said she was 'flabbergasted' when she read a report in last week' Chronicle that the council was being asked to draw up a lease involving her charity.

And she declared that even if the issue was put to the charity's trustees, it was now 'unlikely' that they would agree to take on the running of the community cafe.

It would take a massive 20 percent hike in council tax on top of the five percent the councillors were already suggesting to cover the missing money.

Without that kind of increase, the council would have to look at increasing its fees and axing projects such as funding the town's diamond jubilee celebrations, supporting next year's Newcomen celebrations or abandoning plans to repair the market exterior.

The town council is now looking at calling a special finance committee meeting to look at what to do next. Finance chairman Francis Hawke said he had only been made aware the day before the council meeting that there was still a '£26,000 hole in the budget'.

'We now need time to go throughout budget and find out where we can meet our commitments. We may have to look to see if we can increase some charges but we need to go through this otherwise it could mean cutting projects that we want to do.'

'Something might have to go by the board,' he warned.

The finance committee was recommending a council tax budget of £137,000 which would have been shoving up the town share of the tax bill by five per cent in the coming year.

That would have covered various projects including £25,000 on clearing silt from the boat float, another £25,000 on repairing the market walls and spending £60,000 on major repairs to the council-owned flat at 6a The Butterwalk.

Dartmouth Museum had been offering to take over the flat to extend its museum footprint and carry out repairs itself – but the town's corporate property committee said it wanted the town council to do the repairs with the aim of renting out the flat at up to £1,000 a month.

At this week's council meeting the councillors agreed to defer doing anything about both the budget and any community café lease until the finance committee has met again.

At the same time the council asked the corporate property committee to think again about spending the cash on the town centre flat.

If that £60,000 was taken out of the budget, it would solve the council's £26,000 'hole' and mean there would be no need for any budget increase.

Cllr Les Barnes questioned why the town was considering spending £60,000 of taxpayers' money to 'do up' the flat when the museum wanted to take it over and do the work.