Brighton and Hove City Council departments overspent their budgets by more than £1.75 million during the last financial year.
The sums are now being written off by the city council.
At one time, council officials were forecasting the overspend would be more than £5 million.
Chief finance officer Chris Taylor said departments had made considerable savings, but the overspend was still large.
It was important budgetary control measures remained in place to prevent overspends this year.
Mr Taylor said: "The figure represents a considerable improvement and a significant amount has been saved through vacancy management and spending restraint."
He said writing off the sum would ensure new directorates formed by a shake-up of the council would start without a deficit.
One of the biggest overspends, of more than £2.3 million, was on homelessness and this proved hard to shift.
Liberal Democrat leader Paul Elgood said: "There is a culture of overspending in this council, which has to be stopped once and for all."
He said overspending of £52,000 in the policy and communications budget was unacceptable because this was not a frontline service, unlike dealing with homeless people.
The city council has an annual budget of more than £250 million and always has a few million pounds in reserve.
The policy committee earlier this year took the decision that the deficit would be met from reserves but wanted to keep it as low as possible.
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