Tamworth Regional Council budget deficit: $3.2 million shortfall forecasted as mayor Russell Webb warns of tough times ahead at State of the City

Hiring freezes, cuts to services like the pool and library and community events are all on the table, Tamworth Regional Council (TRC) general manager Paul Bennett said, as the council tries to claw the budget back to a pre-pandemic bottom line.

"We never like to do anything that is incredibly visible to the community, but we have to have a freeze on employment which is one option," he said.

"We can try to cover those roles, but it means it's slower to process things, slower to repair things and maintain service levels.

"We're a $200 million organisation, cutting $3 million, you can do it - but it won't go unnoticed."

There's a few reasons for the multi-million hole; the council has to give staff a 2.5 per cent wage increase at about $500,000.

Insurance premiums are expected to go up by about $1.1 million, as well as fuel and material prices rising in a changing international market.

And, with the Independent Pricing and Regulatory Tribunal offering councils just a 0.7 per cent rate rise - when it expected 2.5 per cent - it will be difficult to make back lost funds.

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It's going to be a tough couple of months, Tamworth Regional Council (TRC) mayor Russell Webb said at the State of the City leaders forum on Thursday.

"It's going to be tough, it's going to be tight - it's a bit like small business," he said.

"I know the general manager is sitting there nodding his head thinking it's going to be a hard sell, not only for the old councillors like Mark Rodda and Helen Tickle and myself, it's going to be a tough sell for the new councillors.

"All of the councillors have put their hand up to be elected representatives and serve you as the business community and the community large and wide and try and deliver some great outcomes - that's what we will be trying to do."

It comes as the council's most recent budget review revealed the airport had lost double the income expected, down $500,000 due to dwindling passenger numbers in the Omicron outbreak.

The council also lost more than $137,000 in unrestricted funds due to remediation works at Ray Walsh House, a $70,000 blow due to tourism and $40,000 caused by a lack of bookings at its entertainment venues.

It will have the option to apply for a special rate rise without community consultation to make up the 1.3 extra per cent it expected.

Areas where more funds can be cut are expected to be presented to councillors in April.

Business leaders at the event also heard from council's executive leadership team on tourism, job growth, major projects and developments.

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