By Vaughan Roderick BBC Welsh affairs editor

Councils estimate 8-10% council tax rises are needed

As Welsh councils learned how much money they will receive from the assembly government next year, howls of anguish were more or less guaranteed.

Some see the councils' complaints as an annual ritual.

Almost invariably the Revenue Support Grant (RSG) is accompanied by ministerial assurances that the settlement is "tough but fair" and council complaints that public services will have to be cut and council taxes increased.

The RSG represents by far the largest source of income for local authorities and even small variations can have major knock-on effects.

Next year the RSG will rise by 2.3%: using the assembly government's own assumptions, that's a cut of 0.5% after inflation is taken into account.

That may not sound like much, but local authorities claim that because of increased demand for existing council services, new government initiatives and pay increases, it would take an 8-10% hike in council taxes to make up the shortfall.

The assembly government would be unlikely to tolerate increases of much more than 5%, but hopes that with local elections next May, councillors' fears of voter retribution will make a centrally-imposed cap on the increase unnecessary.

Waste disposal

Some councils have been hit harder than others with a handful facing rises of less than 1.5%. Powys, for instance, has 1%, and Anglesey and Conwy 1.1% each.

While the assembly government admits the settlement is tight, it believes that the councils are over-stating their case.

It points to extra central grants the councils will receive next year to help with waste disposal and education for three to seven-year-olds as proof that the situation isn't as grim as the authorities suggest.

It also points out that Welsh authorities are more generously funded than councils in England and that council taxes are substantially lower in Wales.

The assembly government also believes that there are substantial savings to be made by eliminating waste and duplication in local government.

Privately, many AMs believe that Wales has far too many local authorities. Merthyr and Anglesey councils, for instance, serve populations of under 60,000.

It's hoped that financial pressure could force the smaller authorities to pool their resources.

The assembly government knows it can't push the councils too hard.