Job stand downs and cost cutting also helped buffer the city's finances but Cr Sue Cassidy warned the tougher times were to come.

"I do not think we have seen the real effects of the first half of the year come through these financials. You will see it in 2020/21," she said.

"The coming years are going to be hard for councils. COVID is not going away fast. We are going into the unknown times."

The council actually recorded an accounting surplus of $12.36 million by the end of June but that mostly accounted for grants for big projects such as Reid Oval, the new library and saleyards roof which will be be paid for this financial year.

Figures in the draft annual report show the council paid down $1.74 million in debt on loans of $8.3 million but those borrowings are set to grow by another $6.65 million which were mostly to cover its share of Reid Oval and library projects.

The saleyards recorded a $370,000 profit, up from last year's $253,000, while the holiday parks brought in $826,000 thanks to a bumper summer.

Pandemic restrictions which closed the parks over the traditionally busy Easter holidays kept the figures from being closer to last years $1m profit.

Flagstaff Hill Maritime Museum and the Visitor Information Centre cost $750,000 to keep running over the last year, up from the $740,000 last year.

Council's income dropped $4.4 million from $89 million to $84.6 million. Rate revenue was up from $38.2 million to $40.7 million but user fees dropped $2.5 million.

Income from AquaZone dropped from $2.1 million to $1.4 million, parking fines dropped from $641,000 to $555,000. Employee costs dropped from $33.2m to $33.1m.

Cr David Owen listed savings of more than $400,000 from a council decision not to immediately fill vacant staff positions.

He listed a $130,000 saving by not replacing the manager of visitor economy, $57,000 over five months for the manager of economic development position, $79,000 from the manager of community planning and $85,000 over seven months on the manager of revenue of property position.

There was another $27,000 saved over two months from the manager of projects and facilities position and $25,000 over two months the manager of governance risk. Cr Owen also said there were savings of $66,000 in fuel due to stay-at-home restrictions.

The council also saved $30,000 in accommodation charges over five months. "There's a saving there of over $400,000. It offsets our other expenses," he said.

Cr Kylie Gaston said there had been considerable savings due to positions being vacated over the last 18 months that had yet to be filled as permanent positions.

She said acting CEO Vikki King was filling some of the positions and there had been considerable interest shown by people motivated to leave Melbourne.

Cr Gaston said she'd like to see the council take a leadership position on opportunities such as a four-day weeks or working from home.

She said the financial report showed prudent economic management during the COVID-19 pandemic.

"The $2.4m surplus is certainly giving us a buffer into this next year and underpinning operations," she said.

"The surplus has been made by rolling some projects over such as splitting the construction of the saleyards roof over two financial years and subsequent grant funding and delaying the purchase of heavy grant material until 2020/21.

"Sadly as some of the services have closed down there has also been some staff stand downs.

"On a brighter note we have seen many payments in advance from COVID-19 grants with support for services such as meals on wheels, respite care and child and family services."

Cr Sue Cassidy said the council had not fared "too bad" with the 2019/20 financials.

"Some of this I will credit to when grants have been given - some early and sometimes in different financial years," she said.

However, after attending a debrief with the grants commission last week she was told funding rounds were changing.

"They spoke about not as much funding being allocated or the possibility that funding of grants may stop altogether," she said.

"This is a real concern for any council. Not only do council have to deal with the fallout of COVID but the possibility that in the future, funding rounds are going to look a lot different."

She said the council was working towards a plan and doing everything it could to be sustainable.

Cr Mike Neoh said it had been a difficult year in terms of asset renewal. "We all know we need to keep plowing on in terms of funding that aspect of council operations," he said.

The council this year invested $9.77 million on asset renewal works.

Mayor Tony Herbert said the council was in a good financial position given the budget shortfall in revenue.

He said council's early decision meant that, unlike some other councils, through good planning there would be some extra capacity to stimulate the economy moving forward when the time was right.

"To achieve a relatively good outcome in the midst of COVID is a great outcome. Well done to the financial team," he said.

Cr Herbert said he hoped the events of the last couple of month wouldn't colour too much of the council's achievements which he said had been considerable.

He said the most memorable one was being crowned the most livable city in the entire country. "I think we all know why we live here. It's an incredible accolade and one that we should feel proud of collectively," Cr Herbert said.

He also listed the hydrogen project at Deakin, doubling of its community grants fund, city centre renewal, new library, Reid Oval upgrade, Lake Pertobe upgrade, FOGO, dog park, several new bridges, livestock exchange roof, intersection and roundabout upgrades, beach access upgrades, lighting upgrades, marriage equality support, a range of environmental initiatives and support for local business through its COVID support package and China host initiative among the council's achievements.

"We have been busy and we have done a lot and we should be proud," he said.

The cost of having councillors over the past year was $269,000, down from $282,000 last year mainly due to lower costs for training, accommodation and technology.

Councillor allowances including super were $28,479 while the mayoral allowance was $88,119 including super. Another $20,000 was spent on councillors' costs such as iPads, training, travel and accommodation.

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