The dissolution of Dublin City Council after its failure to reach agreement on next year's estimates at a marathon meeting on Sunday is "a very real prospect", according to Fine Gael councillor Mr Gay Mitchell TD.
Councillors rejected proposals on waste management from the city manager, Mr John Fitzgerald, at Sunday's eight-hour meeting.
Mr FitzGerald had wanted to introduce a maximum £150 annual service charge for a new waste management system. It was the fourth attempt in three weeks to reach agreement.
The Minister for the Environment, Mr Dempsey, who is in Brussels, has been informed of the failure to strike the estimates, and the council is awaiting his response.
He has the option of extending the time limit for the estimates to be struck, or dissolving the council and appointing a commissioner to take over the city's daily administration.
A corporation source said the Minister has granted extensions of time in the past, when he was reasonably sure of a positive outcome. If appointed, a commissioner could remain in place until the next council elections in 2004.
Councillors are strongly opposed to the city manager's plan to impose a £150 service charge to fund a major new waste management scheme, and are unlikely to accept it should there be a further vote.
"I'm not going to vote for any charges," Mr Mitchell said yesterday. His opposition was echoed by Fianna Fail and Labour councillors.
Fianna Fail Deputy Mr Pat Carey said "There are a number of people who, because of their position or other reasons, have very little room for manoeuvre. I wouldn't be confident that we could come up with a revised estimate that would command majority support in the council."
Labour representative Mr Joe Costello has suggested alternative funding for the waste management scheme. He said Dublin Corporation's budget was £398 million, and the £13 million the charge would raise could be found "without imposing service charges which will attract hostility.
"We're proposing that we could bridge the gap with extra funding, for example from the new taxi charge which wasn't there when the estimates were drawn up."
Labour colleague Mr Eric Byrne said it was "unacceptable that the affairs of our capital city should effectively be run by an imposed quango, and I am calling on the Minister to ensure that local democracy is preserved in Dublin". He said the proposals were "fundamentally flawed".
Mr Fitzgerald defended his proposals yesterday, saying: "The waste issue is one of the biggest issues facing the Dublin region. New bin collection, waste treatment and recycling service need to be provided urgently. These services cannot be provided out of existing resources and have to be properly financed."