At its Ordinary Monthly Meeting on Wednesday November 27, Armidale Regional Council resolved to note its first quarter Budget Review for 2019/20.
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The review contained a revised operating deficit figure of $4.7 million put down to the impacts of drought.
Council resolved to amend the 2019/20 budget in accordance with the review for the period July 1 to September 30.
The report also warned of the significant negative financial impact on the Water Fund, long-term water security and the financially unsustainable outlook that currently existed for the Water Fund reserve.
Councillors resolved to explore options for assistance from State Government in a Councillor's workshop.
Cr Di Gray stated it was a concerning situation with both drought and fire in the area being factors relevant to the budget, and Cr Andrew Murat said he agreed with her assessment of the situation.
"We've just got to recognise that it's issues out of our control, so hopefully State and Federal governments might come forward with some more drought funding to fix those drought problems," he said.
A review of the water fund showed significant negative impacts on both the operating and cash results with a forecast operating result for the Water Fund at a deficit of $5.1 million, and a negative cash impact of $10.8 million forecast.
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"The negative adjustments are predominantly related to the impact of the drought but there was also a reduction in interest included due to lower interest rates, with the most significant operating expenditure impact is from groundwater drilling, forecast at $2.4m and a reduction in water usage charges has also been forecast at $2.5m," the report read.
It said a number of capital projects were revised or deferred due to the drought.
"At this time no additional income has been included for drought related expenditure impacts other than for the amount claimed for water carting," it read.
"Council does not have confirmation that any of these additional costs will be covered by the State Government.
It stated there was a risk that the drought response and impacts could utilise all available funding in the water reserve.
"Even assuming 50% recovery for key water security projects shows that the water fund could not sustain all current projected expenditure over the next 2 years," it read.
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