"Councillors, this does not by any means pull us out of a very dire position, but I believe that it shows a great commitment and teamwork by our staff," said mayor Cr Paul Hogan, in a message read to Wednesday's meeting by deputy mayor Cr Robyn Jenkins.

"In 2010 we charged the executive with the responsibility of improving the financial management of this council and in doing so, improving the financial position," he said.

"Since that time we have seen some significant changes in the way budgetary information is presented to us with increased transparency that means we have a much greater understanding of our financial position, the challenges that face us, and the opportunities that exist.

"We have also seen significant improvements in our very weak financial position. In June 2010 we adopted the 2010-11 budget with a projected deficit of over $2 million and in June 2013, we began the 2013-14 financial year with a projected deficit of $423,595.

"I am very pleased to see that the executive and all budget managers of Greater Taree City Council have taken our resolution of 2010 with such seriousness that in 2013-14 they have turned that deficit into a surplus of $829,783.

"We have some difficult decisions ahead of us in relation to sustainable service profiles and I am pleased that we have a staff body that is willing to support our endeavours in this regard."

Council voted on the recommendation to move the surplus to reserve, where its use will be restricted by a resolution of council.

This was recommended from council's finance and corporate support staff because "following a year of increased legal activity, some of which continues into the 2014-2015 financial year, it is prudent that caution is exercised in relation to the surplus".

Funding is also expected to be required towards the construction of Dyers Crossing and Dickensens bridges and reconstruction works on Manning Point and Gloucester roads.

The report to Wednesday's council meeting said the favourable budget variations which achieved the final quarter result were:

o $2,157,369 gained from waste management commercial waste following a waste reserve review

o $228,227 nett savings in operational costs in building services

o $170,684 savings in natural disaster funding due to timeing of expenditure (2012/13) and subsequent funding (2013/14) for Granny Fahey and Goldsmiths bridges as reported last financial year

o $129,629 savings in parks operations

o $113,824 favourable budget result in stores (fleet) capital purchase/sales

Unfavourable variations were:

o $1,792,185 unfavourable variance due to Federal Government withdrawal of advancing instalments for Financial Assistance Grants (since June forward instalments have not been made, and staff have made every effort to review budgets, identify efficiencies and strategies to manage this budget impact, council was told)

o $137,219 unfavourable variance in Bushland Drive and Old Bar Road projects, incorrectly reported in the second quarter as savings in relation to retention monies

o $86,000 unfavourable variance in legal expenditure to defend an unprecedented number of cases in the Land and Environment Court.

The audited financial statements for the end of year will be presented to council in November.