A Queensland audit of local councils has revealed  70% of councils spent more than they earned in the 2020 financial year.

Auditor-General Brendan Worrall says although the proportions are higher than previous years, COVID restrictions meant councils earned lower revenue.

Councils that are more reliant on yearly Government grants fared worse off; with the Audit Office recommending the Government review its funding model to transition one year grants to a 3-5 year model.