Rural City of Wangaratta Mayor Irene Grant is confident council's financial position will recover following a downturn over the last six months.

At the start of the financial year a $3.78m surplus was forecast, however, a $5m blow from Co Store contract exit, adding to a perfect storm of cash shortfalls, council expects to find itself $5.69m in the red by 30 June.

A decent slice is from decreased forecast users fees revenue, including early learning (-$419k), aged care (-$244k), government centre tenant vacancy (-$155k), parking revenue (-$138k) and sports centre hire (-$88k).

Operating grants income also fell due to less home care packages being funded (-$923k).

Cr Tania Maxwell told the February council meeting that she had concerns about the budget and the ramifications it may have on council's long-term position.

"Given the number of unfavourable decreases in income such as operating grant movements, user fees, a tenancy vacancy and stadium higher, I would hope that our next budget will reflect an improvement on this financial position," she said.

"While there are decreases which may be out of our control, and a revised budget is not warranted, I believe there are significant savings to be made in the future with the assistance of our new CEO Matt Nelson, who takes the reins in April this year.

"Savings such as reducing legal fees, consultancy fees, and going back to our core business to ensure money spent is within our council remit.

"We have expanded revenue, which does not reflect community sentiment and evidence-based requirements.

"I will support this budget, however, I have concerns that this comes at the expense of providing our core roles and responsibilities to our community."

Mayor Irene Grant agreed and said council needs to focus on its core business and that the deficit was a snapshot in time that she was comfortable with.

"I'm confident that the next forecast review will show a much more favorable financial picture and council will work very much on its core business to ensure that this is not just something that happens in 2026," she said..

"This is something that will as we move forward as a council and we are able to meet the needs of our community and maintain our financial viability in the process."