The interim administrator of Central Coast Council says $7 million has been recovered since its dire financial situation came to light last month.
It is Dick Persson's second week in the job as he attempts to find answers to alleged financial mismanagement, which found the council facing "liquidity issues" and a debt worth $89 million.
All 14 councillors and the mayor were suspended when the council was unable to pay its 2,000 staff.
In an update to the 100-Day Business Recovery Plan, the council said some of the cash had been recovered after being spent from the wrong bucket of money.
"Early findings have shown that all plant and fleet items have been charged against the general fund's unrestricted cash instead of internal reserves for the different funds," a report into the council's finances said.
"For those plant and fleet items that are predominantly used for located at waste, water or sewer, so far over $7 million has been identified as suitable for accounting reallocation."
Mr Persson, who was appointed by the NSW Government, admitted the financial crisis was worse than initially thought.
"I'm afraid I have to say to people if they were hoping for me to come out and say it's not as bad as we thought, that's not the case," he said.
"It's a very serious situation we've found ourselves in."
$50m worth of property assets to be sold
The council also plans to sell off up to $50 million worth of underperforming property assets in a bid to reconcile its finances.
It is not clear if those assets include local green spaces.
"We are going to have to make up some ground. There will be borrowings that no doubt will come from the private sector," Mr Persson said.
"I don't want to be specific, but we have some buildings and other assets that you can very quickly sell."
The ongoing cost of the amalgamation of Wyong and Gosford councils in 2017 is believed to have contributed to the blowout.
Earlier this month, a council spokesperson said the merger cost in excess of $100 million.
Mr Persson also cited the impact of COVID-19 and the 2020 bushfires on council finances, but admitted there was also "clearly" some wrongdoing.
"There's lots of different variables in this equation, but we have not been effective enough in reducing our costs and spending," he said.
"Clearly, we've spent money from funds that wasn't allowed."
What is not yet clear is whether rates will rise to help pay off the debt or if local services will be affected.
"Whether or not there's an impact on rates, we'll have to wait and see," Mr Persson said.
"We will continue to deliver the services. How we deliver them is obviously a debate that will occur."
The councillors and mayor are expected to have an online meeting with the administrator in the coming days.
