Falling interest rates will cost the borough council nearly a million pounds this year.

At a meeting of Hertsmere Borough Council’s executive on Wednesday night, councillors approved provisional amounts of money needed for the 2009/10 financial year.

The three areas discussed were revenue, capital and investment income.

Revenue, which is money received mainly from council tax and Government grants, is spent on services including waste management. Just under £14.5 million is needed this year with £7,868,240 coming from the Government.

Finance portfolio holder Councillor John Graham said: “We are in fast-moving economic times. There are areas where we know we will have to look at again such as fuel costs for waste vehicles which are going down and also the drop in income from recycling materials.

“But by February we have to come to a view and set our budget for the year.”

As well as regular services such as waste collection and parking control, the council sets aside money each year for projects including repairs to its buildings and new facilities such as the community theatre.

These projects are funded from money left unspent from last year and received from developers. Included in the list of projects for this year is a replacement heating system at the council’s civic offices, in Elstree Way, and a boiler at The Venue, in Elstree Way.

Mr Graham said: “We are proposing approximately £500,000 for capital projects this year. We have looked at these very carefully, regarding the current economic situation and have been holding back but we are in a situation unfortunately where we have to replace the items.”

But the third source of income, investment, is likely to be hardest hit as it is depends on the interest acquired from the authority’s investments.

The estimated figure of £600,000 for the coming year is a drop of around £900,000 from that earned last year.

Mr Graham added: “This is going to squeeze the council and is one of the big challenges facing us.”

The figures will now be discussed by the council’s overview and scrutiny committees before going to a full council meeting in February for approval.