City of Newcastle will need to find more than $150,000 in savings to deliver its forecast $450,000 surplus in the 2026-27 budget.
The squeeze comes after councillors agreed to continue $2 pool entry, a move that is expected to cost ratepayers more than $600,000 next season.
While the council is yet to determine how it will deliver savings to meet the forecast surplus, it maintains it will invest a record $458 million into projects and services across Newcastle next year.
City of Newcastle chief executive Jeremy Bath said the almost half-a-million-dollar surplus would position the council well to deal with potential unexpected costs as they arose.
"The current environment and growing cost-of-living pressures are challenging," Mr Bath said.
"Maintaining an annual surplus in the past has allowed us to react when the community has needed us in situations like the Wickham wool sheds fire, the Lambton landslip and the recent Mayfield fire, without sending us into the red."
Mr Bath said the council had a duty to be responsible with ratepayer funds, especially in a challenging economic environment where everyone was feeling the pinch.
This month, councillors voted to continue $2 pool entry at Beresfield, Wallsend, Mayfield and Stockton, and to extend the deal to concession card holders at Lambton.
Council staff will need to find ways to absorb the costs of subsidised entry into the budget as part of its September quarterly review.
In a social media statement, Liberal councillor Callum Pull said that due to the state of the economy and pressures on the local government sector, the council delivered a "narrow" surplus of $258,000 this financial year.
"To help achieve this, staff held off from filling vacant positions and restricted their own departmental budgets to help our city stay in surplus," Cr Pull said.
"They were willing to make sacrifices to protect the financial position of the city.
"The city had projected a slim $450,000 surplus in 2026-27, but this was completely obliterated when some councillors voted to pursue an expensive contract variation to further subsidise $2 pool entry."
Last year, the council ranked ninth in the state for financial sustainability.
In 2026-27, the council plans to spend $128.5 million across 274 projects.
Those projects include $29 million on road renewal and upgrades, more than $20 million on city and civic venues, aquatic, sport and recreation facilities and $7.6 million on footpath, pedestrian access and mobility projects.
On the agenda for 2026-27 are embankment stabilisation works at Shortland Esplanade, options analysis and delivery for the western Queens Wharf building and design of a Hunter Street trial cycleway from National Park Street to Islington.
Amenities at Tarro Oval will be upgraded, the road renewed at Longworth Avenue, Wallsend, and Georgetown's local centre will be given a facelift, among other plans.
The council's acting chief financial officer Scott Moore said the budget reflected community feedback, with 100 submissions received during public exhibition.
"We had a record number of submissions this year, which reinforced the need for us to continue balancing our investment in services and infrastructure with careful financial management," Mr Moore said.
"Key themes included a desire to see us focus on cost-of-living pressures, the impact of fees and charges on community groups and organisations, and equitable allocation of spending.
"In setting our fees and charges for the next financial year we've reaffirmed our commitments to equity, inclusion and access, with targeted concessions for charities and not-for-profit organisations who use facilities across Newcastle."
The council provides subsidised access to Crown Land, with rent capped at $625 a year to allow groups such as surf life saving clubs, Scouts, Guides, Men's Sheds and sports clubs to provide services to the community.
A City of Newcastle spokeswoman said a modest budget surplus showed the state government and ratepayers that the council was living within its means.
"A sustainable surplus ensures City of Newcastle can meet our ongoing service obligations, respond to unforeseen events, and invest in the maintenance and renewal of essential community infrastructure such as roads, parks and public facilities," she said.
"It also supports long-term financial resilience by reducing reliance on debt and providing capacity to absorb cost pressures, including inflation and rising service delivery expenses."
Any changes to ensure the budget remains in surplus will be publicly reported and considered by the elected council as part of the September quarterly budget review.
