Local government finances in Wales are on an ‘unsustainable path,' according to a report from Cardiff University's Wales Governance Centre.
Analysis found councils face an estimated funding gap of £744m by 2027.
Researchers said use of reserves, council tax increases of more than 5% and further funding from the Welsh Government could ease challenges next year.
But the report said beyond that Welsh local government finances appeared to be on an ‘unsustainable path,' with the funding gap growing each year.
Researcher Guto Ifan said: ‘While local government services have been spared from the cuts announced for this year, the projections outlined in the briefing suggest a difficult medium-term outlook for Welsh local authority budgets.
‘Inflation and pay rises are set to fall over coming years, but spending pressures are still likely to outstrip projected increases in funding. This could have a serious impact on the provision of local services.'
