Concern over a possible £14million funding gap in East Lothian next year saw warnings the council will struggle to keep vital services on track.
Despite reporting an overall underspend of £254,000 up to the end of December, finance chiefs warned councillors some services were expected to go over budget with children's services on track to overspend by nearly £1million alone in this financial year.
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And East Lothian Council's head of finance Sarah Fortune told a virtual meeting of the council future funding remains at "significant risk"
Ms Fortune told the meeting that the local authority continued to face significant additional costs from Covid with this year's cost expected to be £14million.
She said: "To date, these costs have largely been mitigated by additional, one-off, national funding, but the recurring implications balanced against non-recurring funding streams remain a significant risk in future financial planning."
A report on the Quarter 3 spending of the council said that overall it had underspent and was on course to come in within its budget at the end of the 2021/22 year.
It revealed some areas such as corporate management budgets had seen large savings from use of loan repayment holidays and additional Scottish Government funding.
Others, such as infrastructure, underspent because of the impact of staffing issues among other Covid-related impacts.
However children's services has overspent £813,000 over its budget already and is expected to top £1million by the end of the financial year.
The report said this was mainly due to continuing demand for
residential, secure and external fostering placements with work ongoing to provide more of these services within the county itself.
Council leader Norman Hampshire said the impact of Covid on children in particular would need added resources for years to come.
He said: "Covid has had an impact on everybody bit more so on children.
"A lot has been said on education and missing out on that, just as their social development has suffered.
“It will have an ongoing effect for the next few years as they try to engage into the wider community and we need to do all we can to give them support to get back to a normal way of living.
“If the money does not come in the future and we still have impacts from Covid we will struggle to make sure all our services keep within budget."
However SNP group leader Councillors Stuart Currie warned against assumptions that additional Covid funding would not be made available in future years.
He said: "Comments are being made about whether funding will be recurring. The impact of Covid will take beyond this financial year and the next financial year to unwind.
“If some people think it is coming to a shuddering halt, some people 400 miles away might think this, it is not.
“It is in no-one’s interests for children's services or any of our services to collapse or not be able to deliver what is needed.”
The council will hold a special meeting next week to set its budget for the year ahead.
