City of Newcastle has recorded a $12.5 million deficit amid a $100.6 million capital works spend last financial year.
The council released its annual financial report to be tabled for adoption at this Tuesday's council meeting, after it was reviewed by the NSW Audit Office.
The $12.5 million deficit before grants and contributions was put down to several contributing factors, including a decision in August 2021 to spend an extra $10 million on COVID support measures to stimulate the local economy.
The additional investment was funded from the city's cash reserves.
Council also said the Wickham fires clean-up cost $2.5 million, which remained outstanding by the owners of the two demolished buildings, while Newcastle Airport, which is half owned by council, also suffered a $2.3 million loss against a forecast profit of $4 million.
Other revenue was under budget by $3.6m due to lower parking and fines revenue.
This is the third consecutive budget deficit the council has recorded.
A surplus of $1.2 million had been predicted when the 2021/22 budget was adopted last year, which council said was "built on an assumption that the impact of the pandemic would steadily decline throughout the year".
Lord mayor Nuatali Nelmes said COVID-19 placed "significant strain" on the budget, but stood by the decision to provide the targeted additional funding.
"This decision, which was made in the midst of a pandemic-enforced lockdown that would ultimately last for more than two months, was only possible due to our strong financial position, a legacy of delivering six consecutive operating surpluses prior to the pandemic," she said.
The $100.6 capital works spend was roughly on par with the adopted spend of $90.4 million with the $10 million stimulus added.
Total operating expenditure for 2021/22 was $349 million, up $4.1 million from the previous year, and $19 million higher than initially predicted when the budget was adopted.
Almost $3 million more was spent on roads than the $13.68 million that was budgeted, which the council partly attributed to the stimulus funding.
The spend on the redevelopment of Newcastle Art Gallery was $1.8 million - $1.48 million less than what was planned.
A council spokesperson said this was due to a delay in receiving formal approval from the NSW government for mine grouting works, but the gallery was still due to reopen mid-2024.
The adopted budget for 2022/23 forecasts a return to surplus of $1.3 million, which council said remained on track based on the latest performance reports.
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