North Yorkshire Fire Service used cash reserves to function
A fire service is in an "unsustainable position" after relying on cash reserves to plug a financial gap.
A report found North Yorkshire Fire and Rescue faces "very serious challenges" and "tough decisions" had to be made.
New Fire Commissioner Julia Mulligan said an emergency budget had to be set after seeing the document.
The independent report said that if nothing altered before the 2022/23 financial year, the service will overspend by at least £3.5m.
The document, prepared by the former Oxfordshire Chief Fire Officer Dave Etheridge, highlighted the use of reserve cash because of a falling budget and increasing costs.
Mr Etheridge said savings of £2.2m per year were needed to maintain the level of service provision from 2019/20, although this figure could increase to £2.5m.
When a rise in employer pension contributions is factored in, the shortfall could rise by £1.5m per year, meaning savings of up to £4m per year would be needed.
Ms Mulligan has taken over the running of the fire service alongside her role as the county's Police and Crime Commissioner.
On publishing the report, she said it "shows in stark terms why it is so important for there to be a proper, transparent plan to ensure the service has a strong and sustainable future".
She continued: "This is not the case at present and the challenge I inherit is significant.
"What's more, there have been opportunities [to] address the double whammy of a reduction in funding and increase in costs, yet the shortfall has been covered by using reserves.
"As the independent report finds, this was an unusual approach and not sustainable. It can't go on - every day the amount in those reserves goes down, every day they get closer to running out.
"I need to be up front in saying that tough decisions will have to be made."
Danny Myers, York Labour Group Fire spokesman, said: "Lib Dems and Tories voted to introduce the Police and Crime Commissioners and now we have a situation whereby both police and fire services are going to be cut without proper accountability to residents.
"This will mean that after eight years, North Yorkshire residents get a slower response time to their 999 calls, it's absolutely outrageous and very dangerous."