It was the council's first recorded deficit in nearly a decade and followed council's surplus of $1 million in the previous 12 months (2018-19).

The financial report presented at the last meeting of Port Stephens Council stated that the cause of the deficit was "a $4m downturn in council revenue across council operations as a result of COVID-19".

"Total income decreased by $597,000 [or 0.5 per cent] and total expenditure grew by $4.5m [or 4 per cent]," the report stated.

A council spokesperson confirmed it was the first year that an underlying deficit had been reported since the 2011/2012 financial year.

"Given the tough economic times a deficit of $185k is a great result. The forced closure of our holiday parks for an extended period due to COVID-19 was the biggest contributor to the decrease in revenue. Revenue from parking meters was also greatly reduced due to the closure of the tourist areas in NSW."

All Port councillors congratulated the finance staff on the result, including Cr Giacomo Arnott who added that he was surprised to see an increase in staff travel and allowances.

"Compared to the previous 12 months, there was an extra $500,000 spent on staff travel and allowances... I'm not 100 per cent sure how that has happened considering we were basically locked out for half of the financial year," he said.

In response, a council spokesperson said that there had been changes to the reporting structures, which meant the figures for this year included all travel allowances as well as all other allowances paid to employees.

"In previous years, the other allowances were included in the salary/wages line item," the spokesperson said.

Meanwhile, Port councillors have agreed to exhibit the revised Debt Recovery and Hardship Policy, where funding can be made available to a maximum of $20,000 to ratepayers having difficulty paying their rates.

"The council has a statutory obligation to levy rates, charges and fees and promptly collect payment while taking into consideration the NSW Government's Local Government Debt Management and Hardship guidelines," the report stated.

Cr Arnott said that locals sometimes needed options when it came to the payment of council rates.

"I've been pushing for over a year for this option to be provided, and I'm glad that funding has finally been located and allocated. We all need a leg up sometimes, and the council has a history of supporting locals when they need it most," he said.

"It would be a great outcome if nobody needed to access this rates assistance program, but especially now during the COVID downturn, the option is there. If anyone needs to use it, please do."

Key policy changes propose the inclusion of the Rates Assistance Program which was initially proposed to be undertaken only on the basis of a successful SRV application; earlier customer notification of overdue amounts; allowing more time for customers to seek assistance before legal action is commenced; a higher minimum debt threshold for rates before commencing legal action; and making concessions in response to customers with extenuating circumstances who incur dishonour fees or judgment debts.

The policy will be on exhibition until December 9.