A FREEZE on new staff is among the ways Port Macquarie-Hastings Council hopes to peg back a budget deficit this financial year.

A $406,848 deficit is expected.

Council's interim general manager David Mead is looking at ways to reduce the deficit including restricting overtime and casual hours and putting a freeze on staff replacement and new positions unless there are compelling reasons.

NSW Local Government Department figures show the council had 509 full-time equivalent staff in 2005-2006, compared with 374 full-time equivalent staff in 1998-1999.

Today's total staff figure is believed to be 650.

Administrator Dick Persson is hopeful the council can reduce the expected deficit.

"These (cost cutting measures) are normal things done in a big public sector organisation when you are not living within the budget," he said.

The shortfall would have a relatively small community impact, Mr Persson said.

It could mean some projects are slightly pushed back but no staff positions will be made redundant to cut costs.

Mr Persson said a deficit one year meant the council had to absorb costs the next year.

"We should be disciplined and we should be managing within our budget each year," he said.

Mr Mead described the budget deficit as "most unfortunate".

It was vital to have a balanced budget, he said, or a small surplus.

A larger concern is the financial impact stemming from the likely loss of control of our water and sewer service after a state government review.

Mr Persson gave an assurance he would be focusing on all he could do through the review process and drawing on his contacts within the state government to ensure the decision-makers were aware of the full implications.

The council's submission to the statewide review of country water and sewer services proposes the creation of five new water corporations.

The organisations, owned by the councils contributing the assets and receiving returns through dividends, would take in the Mid-North Coast, North Coast, South Coast and Southern Tablelands, South West and North West.

It suggests all assets, staff and operations be transferred from water utilities to each of these new regional corporations, which could be governed by commercially focused professional boards elected by share- holding local councils.

Council's water and natural resources director Geoff Freeman will present the council submission to the Water Utilities Review hearing at Coffs Harbour on Wednesday.

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