Shetland Islands Council faces serious pressure to address a projected £134m budget gap by 2029-30, auditors have warned.
The Accounts Commission said the council had continued to rely too heavily on its large reserves to balance its books — a practice it described as unsustainable.
Councillors and officers have been told to take a more strategic, long-term approach to achieving financial balance.
Although the council has improved its performance management and community engagement on budget priorities over the past three years, auditors remain concerned about the pace of its change programme.
Deputy chair of the Accounts Commission, Andrew Burns, said: ‘We're calling on the council to urgently increase the pace of its change programme and prioritise the actions that will help it achieve financial sustainability in the medium to long term.'
Council leader Emma Macdonald said: ‘The gap between the funding we receive and what services we are expected to deliver is significant – and it is an unsustainable situation.
‘We are determined to ensure the council addresses its unsustainable use of reserves while innovating and collaborating to address our population challenges, reduce inequalities, and sustaining and growing our economy.'
