A monthly report submitted to Tuesday's council meeting said at the end of February, the consolidated year to date operating position was a deficit of $4.1 million - a positive variance to the budgeted deficit of $5.8 million. The revised projected deficit for 2021/22 is $13.5 million.

The report listed reduced revenue from Summerhill Waste Management Centre and development applications as well as equity market volatility towards the end of January and February as some of the factors in the budget position.

Labor deputy lord mayor Declan Clausen said the first half of the year was "significantly disrupted by COVID", which continues to impact works delivery with staff isolating or caring for family.

"But this report demonstrates that we are ahead," he said. "We heard in the course of receiving the update last week around the status of our works program for example, the fact that we're ahead compared to the position that we were in this time last year, and acknowledging last year that we delivered a record capital works program."

However Independent councillor John Church said "this will be the third year in a row this council has gone into the red".

"While I acknowledge as councillor Clausen has rightly stated that COVID has had a negative impact on our budget, and our response has been to lean in... to boost economic activity and to save jobs, I think in the long run, we cannot exist by spending more than we're earning and continuing to dip into our reserves to pay our bills as a long term strategy. It's not sustainable," Cr Church said.

Lord mayor Nuatali Nelmes hit back saying the council had "deliberate strategies and very specific COVID stimulus packages", including the unanimously-supported $14 million addition to the works program, which she said had created an estimated 700 local jobs.

"We have reserves put aside for very specific works around the city that are sitting in reserves to be used for those purposes," she said.

She did acknowledge there would be "questions" about the budget, but insisted it was a "paper deficit".

Cr Clausen and fellow Labor Carol Duncan dismissed Cr Church's sentiments as "scare mongering", with Cr Clausen saying a deficit was a "mathematical requirement" of spending money from reserves.

Greens councillor John Mackenzie said the decision to add to the works program was made "openly and transparently" and the election since "could be interpreted to vindicate that decision".

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