The Horsham Rural City Council's draft 2020-21 budget reveals a $1.25 million deficit.
By contrast, the 2019-20 financial year operated at a $3.32 million surplus.
While council expects its total revenue to rise by $1 million, its total expenditure is set to spike by $5.6 million.
The COVID-19 pandemic forced council to remove $2.4 million of expenditure from its initial draft budget, formulated in February, according to Mayor Mark Radford.
"The 2020-21 budget is maintaining council's services where they have not been forced to close," Cr Radford said.
"I take this opportunity to thank the council staff for their flexibility during this time to ensure that those continuing services are delivered to a high standard."
Council has proposed to adopt the two per cent Ministerial Rate Cap, which increases rates in line with Treasury forecasts of the Consumer Price Index.
The rate increase generates $484,000 in additional rates.
The entirety of this increase has been allocated to provide business and community support amid the coronavirus pandemic.
Council said it has taken a "hard approach" to keep cost increases to just one per cent of the 2019-20 budget.
It proposes this generates a real saving of 1.2 per cent, with CPI at 2.2 per cent.
A change from four directors to three, a new printing and copier system, solar panel installation on municipal buildings and a new fuel supply contract are among the cost savings.
Council has forecast its revenue from parking meter fees will halve next financial year.
In 2019-20, parking metre fee revenue was $390,000.
The 2020-21 budget forecasts this measure will net just $195,000.
In March, council announced parking in central Horsham will be free until at least June 30.
Council's chief executive Sunil Bhalla said the measure acknowledges the adjustment businesses are making to their operations.
"We want to make it was easy as possible for people to complete their essential shopping and get home again," Mr Bhalla said in March.
Statutory fees and fines, including health registration, local laws permits and infringements will plummet 22.7 per cent, leaving a $91,000 gap compared to 2019-20.
User fees, including animal control, sports complex and visitor information centre income are also set to decrease.
All users fees will see a 6.2 per cent drop in revenue, with the steepest decrease of 53 per cent noted in sports complex user fees, which fall from $106,000 to $50,000.
Performing arts charges will decline 43 per cent, a loss of $472,000 compared to 2019-20.
Council notes some "abnormal cost increases", in conjunction with the COVID-19 pandemic.
It said cost increases have been contained to one per cent of overall growth.
Insurances have risen 18 per cent, gas costs have spiked 21 per cent and kerbside recycling costs have risen 12 per cent, or $104,000.