A report presented to Council at its October 26 meeting indicated that the first quarterly budget review had given a satisfactory result and showed "sound budgetary management".

The $712,000 deterioration in the budget total came from a nearly $5 million reduction in grant funding for the Cowra Emergency Drought Water Supply and a $25,000 drop in interest and investment revenues in the sewer fund.

Both councillors Ray Walsh and Judi Smith said council was in a "comfortable financial position".

"This is a revised estimate after the first three months of the budget," Cr Smith said.

"We can look forward to many more ups and downs as council makes decisions and as circumstances outside our control, such as the gaining of grant funding or not as the case may be, make changes.

"We do still have a surplus projected of over $17 million most of which as people would understand is tied up in certain funds and can only be spent in certain ways."

In speaking on the review, Cr Peter Wright said it was important people understood where funds and reductions were coming from.

"If someone sees a 14 million dollar surplus for water, it's not going to be from increased charges or connections," he said.

"It includes the proposed Billimari project, which I think has been granted $10 million, the deterioration is represented as it was budgeted to cost more but it's come in cheaper so the grant is going to be less.

"Just so people understand, we haven't really been in this position of having a $17 million surplus."

Cr Bill West agreed with that assessment, with the Director for Corporate Services, Michael Jones, confirming the water fund's reduction was through grant reduction.