Chief executive Steve Barron broke the bad news to councillors and employees yesterday morning in an e-mail.
He told them that there was a “significant worsening” of the council’s budget and warned that there would be “staffing implications”.
A request from the Press and Journal for an interview with Mr Barron went unanswered yesterday.
In the memo, Mr Barron said: “I wanted to let you know that the report going to council next week will highlight a significant worsening of the council’s projected financial position, with the budget gap estimate increasing from £13.251million to £46.288million over the next three years.
“The principal reasons for the change are revised assumptions of a real cut in grant funding and government policy changes in respect of pensions and national insurance.
“These previously identified risks can now be clarified and quantified using the updated information we have recently received.
“Of immediate concern is the gap for 2016-17, which now stands at £21.622million.
“Whilst there is a range of assumptions behind the figures, this year is the most clear-cut and represents the biggest challenge. At face value this represents a cut of 3.4% but in reality it is higher when we take into account the various contractual and legislative obligations the council has.
“It is inevitable that the council is going to have to make significant reductions in service to balance the budget, which will in turn have staffing implications.
“At this stage it is too early to say how this may be progressed, but this is on top of existing savings proposals and represents a big challenge for the council.
“For financial planning purposes it is essential that work starts now to identify the potential impact and options.
“At the meeting next Thursday, members will be asked to consider the revised budget gaps for the following three financial years and the implications.
“There will be a need for consultation with partners, staff and the public. Decisions will follow in future council and committee meetings and we will of course keep you informed.”