"It has been an extremely challenging year for this organisation, largely driven by the closure of the museum, the two storm events... As well as the transition of waste systems to wheelie bins which costs more than anticipated.
"We had signalled there would be no new borrowings for the financial year but the additional capital spend meant we did not achieve this."
Mr Colle said when they had set the budget it was balanced but the unforeseen events coupled with an "extremely high" project completion rate created the "perfect storm".
Mr Colle also pointed out that while spending was over budget, overall revenue was also ahead of budget.
Councillor Peter Bentley commented that it was disappointing the council's debt had increased but it was pleasing to know it had been kept at an "absolute minimum".
Councillor Rob Kent said he was "again raising the issue of the requirement for councils to operate within their revenue".
"It horrifies me that even though we've had $600,000 weather events and a $1m unexpected museum contingency, we are still operating with our expenditure exceeding our income by $6.8m.
"This has to be addressed going forward. It has to be addressed in the long term plan. It's time this council starts operating within its revenue.
"Contingencies will always come along and we have to allow for that in our forward planning.
"We can't do anything going backwards, but we can going forward."
In the same meeting councillors voted to make changes to its District Plan in relation to signage around the city and holiday rental accommodation.
Changes to signage, which will include limiting the number of individual signposts in one spot and creating multi-sign signboards for local events, aim to "reduce visual clutter" around the city.
The council has invested in the local Around Town app and is encouraging businesses to advertise on that.
The changes were unanimously passed and will now go out for public consultation.
Proposed changes which will see non-complying holiday homes require a resource consent were also unanimously passed by councillors.
The changes came about after noise and parking complaints were made about a Tihiotonga holiday home last Christmas.
Holiday accommodation that caters for more than 12 people and does not have adequate on site parking will require a resource consent if the changes are put into place.
It is estimated this will be applicable to 8 per cent of Rotorua's holiday rental homes.
It was noted the Lake A zone, which included properties around Lakes Tarawera and Okareka were not included, which prompted mayor Steve Chadwick to suggest there be a standard rule across the region to avoid confusion.
Deputy mayor Dave Donaldson said the changes were a "pragmatic approach to the problem we had in Tihiotonga".
