LISMORE City Council has registered a $10.4 million deficit in it's 2012 Financial Report, which was adopted by councillors at Tuesday night's extraordinary meeting, after a briefing by a representative of council's auditing firm Thomas Noble and Russell.
Council will now face some tough decisions as it attempts to reign in a consistent run of deficits, said council finance manager Rino Santin.
A Zero Based Budget review beginning in July 2013 will look at how to reduce Council's costs without compromising its core committments to services and public works.
"Put simply, we have to best match the cost of works and services to the funding available, or look at other ways to deliver community expectations. This very question will be asked through the 'Imagine Lismore' process as it's not an easy one to answer," said Mr Santin.
A consistent 'on paper' cost hitting council is its estimated $23 million in annual asset depreciation - roughly 2.3% of council's infrastructure asset pool, currently valued at just over $1 billion.
Council is unable to fully fund this expense, leaving a gap between the necessary maintenance of its infrastructure assets - at least 60% of which are roads - and the actual maintenance performed.
Proper asset management has been identified as the biggest challenge now facing local government, and finding the funds to cover ongoing infrastructure maintenance costs will become a core priority of future council budgets.
Mr Santin estimated signficant costs have built up from this not being addressed over time.
"Our assessment of the situation is that it's a situation which LCC cannot adequately address by itself - the amount required … certainly is in the tens of millions of dollars," said Mr Santin.
Council will now look to the results of the Imagine Lismore project to ensure its ongoing expenditures are in line with community expectations of council, and look for areas where it can potentially save.
"It comes back to service levels - if people say the current service levels are satisfactory, then the reality is, that backlog disappears."
"It's a harsh reality, but in order to balance the books Council will have to make some hard decisions."