The Waterford local authority will need to fill a 3.3 million euro hole in their annual budget after a revaluation of Irish Water rates.
Councillors say it will make it extremely difficult to pass any budget and plan to send a delegation to meet with Minister Eoghan Murphy.
Councillors held a special meeting yesterday afternoon and have agreed to inform the Minister that they will be confronted with extreme difficulties in passing a budget as a result.
Council CEO Michael Walsh says he has been in contact with the Department. He says borrowing to address a three million euro deficit is not an option.
The Irish Independent reports that as well as Waterford, all four local authorities in Dublin , Kildare, Wicklow and Limerick are facing combined budget cuts of more than €21m next year because of changes to how commercial rates for Irish Water are calculated.
Politicians are being warned this could have a "profound" impact on funding for roads and other local services, with some councils looking for a bailout from the Government.
The problem has arisen as a result of changes to how commercial rates on Irish Water infrastructure are calculated.
Over the past five years, local authorities were compensated by central government in lieu of commercial rates from Irish Water.
Last year, they received €46m.
From next year, the utility will be liable for commercial rates calculated on the basis of population similar to how rates for telecoms, gas and electricity companies are calculated. Irish Water will still meet the €46m bill but the change in the valuation process means that while most local authorities will get more money, several are facing significant shortfalls.
Proportionately Waterford City and County Council is among the worst-affected with a €3.3m cut on the cards.
Dublin City Council is facing a budget cut of more than €8.7m; with a cut of €4.1m in South Dublin County Council; €2.3m in Fingal; and €1.2m in Dún Laoghaire-Rathdown.
The department said it was "actively monitoring the financial impact of this transition on local authorities, in the context of their overall financial positions". It also claimed that "on a like-for-like basis, local authorities will be in receipt of €23m more in funding in 2020 when compared to 2019".
