NORTHERN Midlands Council last month reported an expected operating deficit of nearly $25,000 at its Longford general meeting.
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The projected $24,828 deficit is almost $40,000 less than its monthly budgeted surplus of $14,804 — a figure earmarked on January 31.
Northern Midlands Mayor David Downie said a range of expenditure increases was to blame for the operations shortfall.
"We're talking about a budget that is probably $15 million," Cr Downie said.
"There was a projected surplus of $14,000 and, with a review, that became an operating deficit of $24,000, that's $38,000.
"At the end of the year that could change again on how the requirements for council spending is coming through."
He said new potential income streams and cost-saving activities could rebalance the figures in coming months.
Cr Downie said a major issue weighing on the council's finances was the federal government's indexation freeze on Financial Assistance Grants.
"Our council is very disciplined in having rate rises at CPI or less and we're always keeping our expenditure to budget," he said.
"By removing indexation of those grants, it's putting pressure on our finances unnecessarily.
"It's not our problem that they've got budgetary issues in Canberra."
Cr Downie said the freeze of indexation meant the council would now have to explore "efficiencies" throughout its budget.