John Alexander has admitted cost-cutting to the tune of £18 million will be required to balance the books at Dundee City Council.
The council leader confirmed his administration was looking at ways to reduce costs after the Scottish budget announcement last week.
The council will have to find fresh savings – which could result in services and staff being cut.
Mr Alexander said: “This year’s budget will be our most challenging, with little room for manoeuvre and no low-hanging fruit in terms of savings and efficiencies.
“We will have to look across all services with a view to reducing our costs significantly, and we estimate that to be around £18m, although that may not be the final position. Reducing our costs comes at a price, of course, and I’m acutely aware that the public expect a level of service which they have had for a number of years.
“I’d be lying if I said we could continue as was and we will need to make some difficult calls, including potential reductions to some services and the number of staff. We have a finite budget and as cost pressures increase and, for example, our wage bill increases by more than £7m, something has to give.
“It’s a legal requirement to present a balanced budget in February and I’ll be working hard to make sure that our budget is not only balanced, but delivers on the things that matter to people in this city.”
Labour councillor Kevin Keenan has pointed the finger at Finance Secretary Derek Mackay.
He said: “Derek Mackay MSP, in his budget, has delivered another devastating blow to our city.”
A Scottish Government spokesperson said: “We continue to ensure our partners in local government receive a fair funding settlement despite further cuts to the Scottish budget from the UK Government.
“Dundee City Council will receive more than £326m to fund local services in 2019-20. Using their council tax powers they could also generate an additional £1.9m to support the delivery of essential local services, meaning an extra £7.5m next year.”
Meanwhile, Dundee City Council workers have been offered a 9.5% salary rise over the next three years. It will result in a rise of 3.5% for 2018-19, 3% for 2019-20 and 3% for 2020-21.