Nenagh Town Council is facing abolition because its 2003 budget has been reported to the Minister for the Environment and Local Government, Mr Cullen, as an "insufficient estimate".
Nenagh town manager Mr Karl Cashen informed Mr Cullen that the council's budget for the coming year was not an adequate estimate.
The Minister could abolish the town council and appoint a commissioner to oversee their business until the next local election. Alternatively, he could give the council 21 days to adopt a sufficient estimate or face extinction.
Mr Cullen is not expected to make a decision until later this week, a Department of the Environment and Local Government representative confirmed.
In a letter to the Minister, Mr Cashen expressed his concern "that the budget, as adopted by members, will be insufficient to defray the expenses of the Nenagh Town Council in 2003".
The town manager urged the Minister to "take appropriate action using the powers available". Mr Cashen added: "I believe that the members have underestimated the town council's expenditure commitments and overestimated the town council's income, leaving a total shortfall in excess of €130,000."
The Mayor of Nenagh, Mr Tom Moylan, said he and the town's eight other councillors are willing to stand over their budget.
"We are willing to stand over the figures and look forward to meeting the Minister. I believe the county council sees town council as a machine to generate income," said Mr Moylan.