Legal Aid ACT president Michael Peedom used his annual report to say revenue was not keeping pace with increases in operating costs such as rent, salaries and the cost and complexity of many legally-assisted cases.

The commission reported an operating deficit in 2012-13 of $758,000 - $422,000 more than budgeted. Total expenditure of $13.097 million was $990,000, or 8.18 per cent, higher than budgeted. The report said running expensive criminal cases, the introduction of new file storage, and costs associated with the Eastman board of inquiry had caused the blowout.

''This gap between revenue and expenditure continues to grow and has caused the commission to seek an increase in its base government revenue,'' Mr Peedom wrote.

''The reality is that unless the commission can secure additional base revenue, expenditure will have to be cut further in order to balance its budgets, and this will inevitably have an adverse impact on services.''

Despite the higher operating deficit, the report said the commission was in a sound financial position, with net assets of $2.754 million and cash and investments of $3.140 million at June 30 this year.

Mr Peedom said the commission had also been squeezed by stagnant federal funding.

He said the future of Commonwealth backing for the commission, through the national partnership agreement, would come under the spotlight in the coming financial year.

The agreement expires in June next year and the commission has provided input into a review of the system by outlining positive and negative effects in the ACT.

''One important matter was the fact that, unlike most other legal aid commissions, the ACT received no additional Commonwealth funding under the [agreement],'' Mr Peedom wrote.

''Added to this is the fact that the [agreement] has imposed significant additional administrative burdens on commission management and staff.

''This work included redefining service types; discussing how service outcomes might be measured; developing new reporting formats and writing new reports to extract the required information from the commission's database.''