Dorset & Wiltshire Fire and Rescue's budget could be about to run into problems, as the service is faced with rising costs, including bigger than expected pay awards.

The news came as front-line staff begin to vote in a ballot over possible strike action after rejecting a five per cent national pay offer.

Money for the settlement this year is likely to be found from the authority's limited cash reserves, but next year it will be more difficult unless the government helps fund the award.

Authority members were told at a meeting in Salisbury that the extra cost of pay awards alone could add more than £1.6million to the revenue budget in the coming financial year.

The award to administrative and other staff, backdated to April, has come in at £1,925 per person, far above the 2% budgeted for and amounting to additional unexpected costs this year of around £500,000.

Had the front line 5% increase been approved this year, it would have cost an additional £750,000 above budget expectations.

At the same time, other costs for the authority are also rising, some by 20%, while grant income is on a downward track.

The authority is also expecting to have to find another £500,000 for business rate increases over the coming two to three years, and has been told that a similar sum in government grant is being phased out over the same period.

The news led one committee member, Cllr Pete Barrow, from Weymouth, to comment that the rising level of uncertainty could mean that the authority was about to face "a brick wall looming in front of us... it's extremely worrying".

A special meeting in the coming week, with a seminar for members, will look at the issues in greater detail, but it already seems likely that council taxpayers may have to find the maximum percentage increase the government is prepared to allow.

The financial constraints could also have a knock on effect on plans for a revamped training centre at Devizes and a new training centre being planned behind the existing town fire station in Weymouth – between them expected to cost around £8million.

The building costs will come out of the authority's capital budget, but the developments will also have long-term revenue implications.

Chief financial officer, Ian Cotter, said that he was as confident as he could be that the plans would still go ahead and had already written in a 20% contingency into the business plan to help cope with rising costs.

Cllr Barrow welcomed the preparatory work which has been going on with Weymouth residents living near the fire station, telling them what is likely to happen when a planning application is submitted in the New Year.

Wednesday's meeting heard that despite the challenges the fire and rescue authority was highly rated and judged in inspection reports said to be well run and efficient, striving to improve its performance in every area.

Said Mr Cotter: "We are in a good place with how we manage our finances – but we do have a challenging forward situation, probably more challenging than it has ever been… it's coming at us from all angles at the moment."

Chief Officer Ben Ansell said that the authority was also preparing for the eventuality of strike action, which he admitted would be a difficult time should the stoppage come about.

"We do have good industrial relations locally and this is seen very much as a national issue by staff," he said.

"It will be really important to focus, in the long term, so we can move forward as one service… we will be able to provide a service but it won't be business as usual although we will be able to provide an appropriate level of response."