Minister of State John Paul Phelan says Waterford Council needs to "dig down" to fund its €1.3m budget deficit.
The Minister says he's given the local authority one-third of his discretionary funding and there will be no more allocations this year.
Waterford Council received an extra €2m in recent weeks to offset the revaluation of Irish Water rates.
It's the only local authority in the country that has yet to pass its budget this year and councillors are due to meet again on Thursday.
Speaking to Damien Tiernan on Deise Today, Minister Phelan says he hopes councillors will work together on Thursday to pass a budget:
"Often I find the work that councils do that's most important in communities isn't big grant allocations, it's small supports for local festivals or events that's happening, and often that's one of the first things that's on the list for a cut.
"We haven't had a situation since the 1980s where a council has been abolished because it hasn't passed a budget, but the council have the next four days to try and find those figures, and I hope working with the officials will be able to find a solution that doesn't suck the life out of smaller communities that are dependent on some of that funding."
