The district has been hit particularly hard by the Government scheme, which gives free bus travel to pensioners, because of its standing as a popular tourist destination and the high proportion of elderly residents.

As a result, Harrogate Council is asking the county council to match the backing it provided last year, but so far the authority has offered just £400,000.

'soften blow'

Coun Don Mackenzie, who sits on both councils, said: "We've got to find the money from somewhere to soften the blow for taxpayers."

Though discussions between officers have now been ongoing for more than four months, he said he was still "optimistic" that an agreement would be reached.

The borough council receives £1.35m of Government money to fund the scheme, but operating costs last year were £2.82m and this year the figure could be even higher, due to an increase in the number of bus passes provided and rising fares.

Coun Geoff Webber, who is also a member of both councils, said the county authority had to agree to the funding.

"We have to have this money, " he said. "I just don't see how Harrogate Council can manage financially without it."

'real problems'

Coun Webber said that unless the county council took responsibility, there could be real problems over the next few years.

Though there have been concerns that Harrogate Council's £1.47m deficit could see a rise in council tax or cuts to services, the cabinet member for resources has looked to allay those fears.

Coun Andrew Jones said: "We've been left with a big bill - it's pretty outrageous stuff from the Government, " he said.

"They keep saying it's fully funded, but we've been forced to meet the costs.

'big impact'

"But while concessionary fares certainly do have a big impact on budgets, we aren't cutting services.

"Really what this means is that other issues, mainly recycling, have less investment than they should have."

The executive member responsible for public passenger transport at the county council said it had already committed a considerable amount to the concessionary fares scheme.

"We've agreed to make a considerable contribution and we will review that position this summer, " Coun Clare Wood said.