An alternative budget which could save old people's homes, libraries and subsidised transport for college students has been put forward.

The budget for Leicester was drawn up by the city council's scrutiny panel, made up of city councillors.

It comes after city mayor Sir Peter Soulsby put forward budget proposals last month which, if accepted, would see the council's eight care homes closed or sold, three libraries shut and subsidised bus travel for students axed.

The scrutiny panel suggested, in its alternative budget, that the council could halt some of the planned cuts if it put less cash into its reserves this year and made savings elsewhere.

Former council leader Ross Willmott, who chairs the panel, said: "The council's finance experts have looked at our plans and haven't raised any concerns. They're fully costed and workable. We have balanced the books.

"The council had planned to increase its reserves from £5 million to £15 million in the next financial year.

"We have suggested increasing them to £12.5 million instead.

"We've also called for a freeze on allowances for council members, including the mayor.

"The current budget proposals would increase spending in certain areas, such as highways improvements.

"We've suggested that spending should still increase in these areas, but by a lower amount.

"By reducing the levels of extra spending in some areas, we can reduce the need for cuts in other areas.

"This document will now go to the mayor and the cabinet and I'm hopeful that our ideas will be seriously considered."

Sir Peter said: "The scrutiny panel has produced a detailed budget document and many of the ideas which have been put forward are very interesting.

"Some of the proposals need more discussion and work, while a few don't appear to make a lot of sense.

"Myself and the cabinet will now consider all these proposals in detail."

The city council must cut £70 million from its £500 million budget over the course of three years. In the 2010-11 financial year, £30 million was cut.

The authority needs to cut £20 million in both this and the next financial year.

The alternative budget proposes continuing to provide cut-price travel for college students, which would cost £65,000 per year, and saving the three threatened libraries – in Fosse, Aylestone and St Matthew's – which would cost £45,000.

It suggests closing only two care homes, which would save £560,000.

These savings would be in addition to the £2.5 million available by reducing the amount of money put into reserves.

Tory opposition councillor Ross Grant said he was not convinced by the proposals.

He said: "The reserves are there as a cushion for any emergency expenditure the council has to make and to protect us against any financial risk. They're not there to plug gaps in the budget."

The final budget proposals will be put forward to the full council on February 22, when they will be voted on by all councillors.