North Burnett Regional Council has accused the State Government of cutting more than $2 million in vital funding.
Council says it received a "bombshell" letter from the Government in December advising that $700,000 a year in Federal Assistance Grants will be removed over the coming three years.
This comes after the Local Government Grants Commission enacted a new Financial Assistance Grants methodology.
NBRC Acting Mayor Robbie Radel said the commission knew their new grants methodology was flawed and they didn't want to "lose face" over it.
"The State Government and the commission promised a transparent, equitable, simple, reliable and stable funding methodology. What they have delivered is anything but," Mr Radel said.
"They are robbing Peter to pay Paul. The State are trying to make this methodology change out as a win while telling regions like the North Burnett, who have worked closely with and done everything the State has asked of them, to deliver services for the community out of their own empty pockets."
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A State Development, Infrastructure, Local Government and Planning spokesperson said the responsibility for allocating the grant fell with the LGGC - an independent body.
"... the methodology and decisions about changes to the methodology are the responsibility of the commission," they said.
The spokesperson said the need for a review of the methodology was supported through feedback received by the commission from Queensland councils.
Fifty out of 77 councils will receive a greater funding allocation under the new methodology, while 27 councils will receive a reduced allocation.
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