They have officially released a draft budget allowing for a $3.4 million deficit and a two per cent rate rise.

The shire is trying to help a community reeling from the COVID-19 crisis and deal with its own anticipated $1 million hit, councillors said as they voted to put the draft out for public consultation.

The shire must choose between cutting services and going into deficit, councillor Max Lesser told colleagues on Tuesday night.

"There is an expectation to expand our services for the community ... we have enough cash reserves to cover ourselves in this time of uncertainty and turmoil," he said.

"Our advice is that we are in a good financial position in the short term."

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Cr Lesser said raising rates was essential to avoid blowing the deficit out a another $1.6 million.

"What we are asking the community to comment on is the best possible compromise at this trying time," Cr Lesser warned.

Councillor Dave Petrusma said a failure to raise rates could reverberate over 10 years and the leave the shire's operations "completely in disarray".

"We still have CPI (consumer price index) increases, we still have staff cost increases, we still have material cost increases," he said.

"And the increasing cost of getting works done have all got to be covered ... I do have reservations about the deficit but I am confident it will be for the year only."

Story continues below draft budget.

Councillor Bronwen Machin said part of the deficit looked worse than it actually was.

The state and federal governments had brought forward grant money after the crisis began, creating a partly "false deficit", she said.

"And partly it's a real deficit caused by our need to spend to get our community working again."

Concerned residents have called the shire's offices following a Bendigo Advertiser report about the deficit, published on Tuesday morning.

More: Shire budget blowout could trigger $3.4m budget deficit

Cr Petrusma understood some callers verbally abused staff.

"In all seriousness, that is just not on," he said.

"By all means ... read (it) and make appropriate submissions if you have concerns, whether they be about the (rates) increase or spending."

Councillors also considered a separate financial hardship policy to support ratepayers, residents and community groups.

It cements flexible rate payment arrangements, animal registration extensions and changes to a range of other permits and charges to help people through the crisis.

The shire will now make the draft budget available online and invite feedback on its website. Councillors will consider changes and lock in the budget plan at a later date.

Click here to learn more or to give feedback.