A BUDGET report presented to Croydon Council's Cabinet on Monday shows the authority is due to overspend by £7.8 million this financial year.
Councillor Simon Hall, cabinet member for finance and treasury, said the excess was due to the higher than expected costs of special education needs transport, looked-after children, adult placements, homelessness and a shortfall in parking income.
The report shows £5 million, from unallocated grants and contingency funds, has been earmarked to reduce the overspend to £2.8 million.
Cllr Hall said the authority was left with a "gaping hole" in its finances by the previous Conservative administration.
"These [the areas with overspends] were areas that I do not feel were fully recognised by the relevant Cabinet members at the time of setting the budget," he said.
"A lot of work is going on to limit the impact this year to try and get back to balance for this year.
"Above all we're looking at a huge amount of work across the board to meet the £93 million challenge that we inherited in terms of the budget gap over the next three years."
Cllr Hall's opposite number in the shadow cabinet, Councillor Steve O'Connell, accused him of letting budgets "spiral out of control" and said he was resorting to "financial gobbledygook".
He said: "The report suggests that Labour has lost none of its knack for financial incompetence. This is a great shame, considering they inherited a tightly-run financial ship."
Council leader Tony Newman said his colleague Cllr Hall was addressing the budget challenges in two ways.
He said: "Firstly, Simon Hall and officers are working very hard to ensure we will set a balanced budget this year and deliver the council tax freeze that we pledged to the people of Croydon.
"We're looking at some quite radical steps in how we ensure that the council is far better placed to ensure we have some longer-term solutions.
"Some of that will also depend in terms of the devolution of powers we want to see from central government and how the funding settlement, in terms of Croydon's share, is delivered."
