A report presented to cabinet members on Wednesday showed the authority was facing a major shortfall for its capital budget for 2008/09 and would have to borrow £33.8m more than expected.

This will take total capital borrowing for the year to £102.5m, although the report said delays in carrying out some developments — including community hubs and young people's centres — would reduce the amount which must be borrowed this year.

Council leader Coun David Kirkham told Chad: "Apart from being hit by rising fuels and food costs, we pay for our capital programme partly by sales of land and property.

"Obviously the values have dropped through the roof over the last year. The expected returns from sales have just not developed and in some cases the developers are just not coming forward.

"We own tracts of land throughout the county where we have had buildings that we no longer use and it helps to pay for our capital programme, so it is giving us some difficult issues to deal with.

"It does mean that we have had to increase our borrowing to pay for the capital programme which we have committed to. We have always had an ambitious capital programme and this is really putting some pressure on it."

But Coun Kirkham said the extra costs would not lead to Council Tax increases and the authority was aiming for a below-inflation rise of three per cent next year.

Capital projects planned for the Mansfield area include the new bus station, new library building at the Old Town Hall and retirement village for elderly people.

• See this week's Chad for a two-page feature on the credit crunch.