JOBS may be lost and a town faces a council tax rise due to an estimated £800,000 budget deficit.

Accountants revealed that part of the shortfall is due to the fact that Burnley is the only local authority in England to receive less money from central government than in 1992.

Figures for the 2000-2001 financial year have not been finalised but it is estimated the authority is facing another year in the red.

That deficit would top last year's shortfall -- which led to service cutbacks and a council tax rise.

Redundancies have not been ruled out as the authority struggles to claw some of the shortfall back.

Last year a 7.9 per cent council tax rise was implemented and jobs were cut at the Burnley Mechanics Theatre and at the bus station, where two toilet attendants were retired.

Account services manager Phil Moor said the level of government funding is severely affecting Burnley's ability to balance the books. He also claims Burnley has new statutory obligations under the Environmental Protection Act to clean the streets and improve recycling, but no extra money to carry out the work.

The Citizens Panel will be asked what it considers the best way forward. Last year the panel voted overwhelmingly in favour of council tax rises to cover the shortfall.

Peter Kenyon, executive member for best value and resources said the council had lobbied Government Ministers many times for more money and would continue to do so.

The deficit will be discussed on January 22.