There were warnings too from council's accounting officer Judy Jordan in her formal statement accompanying the first quarter figures (to September 30) for 2021/22.

Ms Jordan once again flagged that in her opinion the projected financial position at June 30, 2022 would be unsatisfactory.

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"Council's concerns continue to be the cash implications of decisions. Council's expected cash balances at June 30, 2022 are not sufficient to cover the external restrictions," Ms Jordan said.

The projected figures for June 30, 2022 show a consolidated deficit of $3.061m, an improvement from the earlier projection of a deficit of $3.263m.

While the net operating result is over $66m, Ms Jordan pointed out there was $69m in grants which would have to be accounted for, spent or given back.

While the consolidated forecast for all three funds, general, water and sewer show a deficit of over $3m, it is the general fund which is the area of concern.

This multi-purpose fund has the greatest flexibility in how it can be used, but is projected to have a deficit of $7.7m at June 30.

Water and sewer funds are restricted and money must be used for the purpose of the fund. Grants must also be used for the purpose for which they are given.

Ms Bolton said the financial issues would be workshopped with councillors before staff presented their recommendations for resolution.

The workshop will include a full review of fees and charges and other income sources and a review of options for service delivery and working with community to consider agreed levels of service.

Staff will also look at council's asset portfolio and have listed the Bega Valley Regional Learning Centre in Merimbula as one such building that could be sold.

There is likely to be a tougher stance taken on grants to ensure no new grants are accepted nor applied for that bring a requirement for a council contribution or increased maintenance and operating costs.

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Staff said there would also be continued work to hand back RFS and other emergency service assets to government.

There would be continued advocacy related to removing the emergency services costs applied to councils from councils' rates income which are expected to increase due to increased expenditure by the RFS.

Ms Bolton warned that the current high level of grant funding could not be expected to last. Where grant funding was for new infrastructure and assets, it came with a continuing liability for the upkeep of that that asset.

"An expansion of the current asset base will put pressure on future budgets through increased operation, maintenance and depreciation costs," Ms Bolton said.

The first quarter of 21/22 has seen an increase in rates and charges of $95,436, an increase in fees and charges $113,230, a reduction in investment income of $722,797 and other revenue increased by $1,513,472 from the sale of land.

There is also a large reduction of $305,000 in expected income from airport fees due to the ongoing impacts of COVID.

Operational grants have increased by $194,944 while capital grants increased by $7.7m. Major increases are water fund grants for treatment plants at Brogo and Bega totalling $7.6m.

Expenses increased by $405,109 but employee costs decreased by of $482,207 and this has an associated change in materials and contracts. Materials and contracts increased by $841,701 and relates to waste projects that were not included in the carryover revote report.

"A small decrease of $45,613 in other expenses reflect the effort of staff to reduce costs," Ms Bolton said.

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