NEWPORT residents in a band D home face paying an extra £60.37 a year in council tax.

Newport city council wants to increase council tax by 7.3% as the authority struggles to cover a £6.4m shortfall, while the police precept could rocket by 16.8%.

Both hikes are well over the 2.8% rate of inflation and mean band D homeowners will pay £40.35 more to give an annual sum of £589.49 to the council, and £20.02 extra a year to give the police £139.13.

The proposed council tax increase would raise an extra £1.9m towards the shortfall. To cover the rest, the council plans to save £2.5m from service cuts and tweaks, and to use £2m of its savings.

Cabinet members will discuss the proposals on Tuesday before passing the budget to full council for approval on February 24.

The police authority figures are subject to approval on February 13. Mrs Joyce Steven, head of finance and scrutiny, warned in a report to cabinet members that the budget was 'difficult' and contained 'hard choices'.

Proposed savings include closing Bridge Training Centre and cutting job advertising for council jobs - both of which would each save £100,000 - although Mrs Steven said the closure of the training centre was not purely for financial reasons.

The council also wants to relocate Pill Library to save £24,000, and to sell advertising space in Newport Matters to raise £40,000.

Increases in car parking and cemetery fees are projected to bring in £129,000.

Last year council tax jumped by 9.9% but was still the second lowest in Wales.

Mrs Steven said: "Newport's tax will still be below the Welsh average this year."

The council's £6.4m shortfall is blamed on pay and price increases, particularly to teaching staff; an 8.5% rise in energy costs; and 10% more to cover the fire service.

And teachers' workload agreements add another £1.64m. The city's contact centre adds £300,000, the eisteddfod £100,000 and local elections £70,000.

Mrs Steven said that taking £2m from the council's reserves would leave only £4m in the kitty - £1m short of the recommended minimum reserve level of £5m.

But she said savings made during the year could boost the fund and £4m was "sufficient to cover any major unforeseen expenditure".

Of the £185m predicted expenditure between April 2004 and March 2005, 68% will be covered by the revenue support grant from the Assembly.