A council services overspend has risen to £25m with the authority using reserves to "buy time" to make reforms and save costs.
Durham County Council is overspending by £8m more than it previously predicted, with most services projected to overspend against their budgets this year.
Overall, it is estimated the budget for this year will be overspent by £14.6m, says a council report.
A services overspend of almost £25m is predicted, but the council is using almost £12m from reserves to cover the cost.
Read more: Durham County Council calls for government help as it faces £15m overspend
Council leaders say the authority is still in a strong and resilient position, but "spadework" is being done on "difficult decisions".
Members of the public have days left to have their say on how to fill a £37m gap in next year's budget - the lion's share of £52m savings to be made between 2023 and 2027 - in a consultation which closes on Tuesday.
Councillor Richard Bell, deputy council leader and cabinet member for finance, told a cabinet meeting on Wednesday (November 16): "A range of budget pressures outside of our control are placing huge pressures on the council budgets and on our maintained schools.
"Many of these pressures will have a continuing impact into the next financial year and will need to be accommodated when we set the budgets and consider our council tax proposals for next year in February."
He said: "The unavoidable cost pressures we are experiencing at this time are immense, inflation and interest rate increases impacting on pay and on the price of everything we buy, together with escalating demand for children's social care and in home to school transport in particular resulting in significant overspends.
"The net cash limit overspend for all services is now forecast to be nearly £13m, around £8m higher than what was forecast (previously)."
He put this down largely to children and young people's services where the projected overspend had risen from £4.9m to £12.8m.
He added: "It's safe to say that the scale of the challenge in terms of balancing our looked after children and home to school transport budgets next year has increased."
A £10m pot saved up for dealing with the financial difficulties will be used up, along with £4.6m from general reserves.
This will take the general reserves to £23.1m, below a minimum threshold set by the council, added Cllr Bell.
It is predicted other reserves will reduce to £190.6m.
Read more: Durham Council consults on 'staggering £75m cost pressures'
Cllr Bell said: "Overall, excluding schools balances, our reserves are forecast to fall by just under £45m this year, around £3m more than what was forecast.
"There clearly remains significant uncertainty over the financial settlement from Government for next year and into future years."
But he said the reserves showed the council still had a "strong financial standing which, I would venture, is better than many other councils".
He added: "It's because of our strong financial resilience that we can meet some of these pressures from our reserves this year and next.
"But as has been said on many occasions, this is not a sustainable position. It buys us time to make reforms and reduce costs in the council, and without significant additional funding from Government, we will need to find savings to offset these overspends.
"This will involve difficult decisions having to be made, and the spadework for these difficult decisions is being done now."
Council leader Cllr Amanda Hopgood said: "The council is facing unprecedented demand and volatility in terms of cost pressures.
"Pay and price inflation, in particular energy, waste and transport-related costs are continuing to place unprecedented pressures on our budgets.
"We are in a very difficult place in terms of our budget planning for 2023-24."
She said the council's "robust financial management" had been consistently recognised by auditors.
Resources director Paul Darby said there were underspends in the budget too and a £3.6m "overachievement of investment income", referring to the sale of the Sands building.
He added predictions for schools had improved: "However our maintained schools are still forecast to have to draw around £12.6m of their retained balances in year, which is £5m more than was anticipated within the budgets.
"This will still mean that many more of our schools will be in a position of struggling to balance their budgets in 2023-24."
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