MASSIVE cuts will need to be made to the Launceston City Council's new budget and community program support will be axed if it is forced to pay a $5.8 million TasWater bill for its combined sewerage and stormwater system.
The council yesterday refused to give $20,000 support for youth education program Pathfinder due to the impending charge.
The council was last year told by TasWater that it would have to pay $5.8 million annually for the combined system's stormwater component, and the two have since been in disagreement over the true cost of maintenance.
Launceston Mayor Albert van Zetten said the council would not fund any new community programs until a resolution was reached.
He said it should know within the next few weeks what impact any charge would impose on its bottom line.
Launceston general manager Robert Dobrzynski last year estimated that the charge was likely to cost each Launceston ratepayer $150 a year.
Deputy Mayor Jeremy Ball said the council's $109.8 million budget, approved yesterday, would be in disarray if the full charge was dropped on to the council.
``The budget will have to come back to the council and it will require massive cuts across the board,'' Alderman Ball said.
``You could not just tinker around the edges, with minor cuts to projects and programs here and there.
``If a bill hits the council, we're going to be talking about far more than not funding community programs.
``I can't see how the bill can be paid without something drastic happening to the council's operations.''
Mr Dobrzynski unsuccessfully tried to convince the former state government to recognise the combined system as unique under the state's urban drainage laws, which would have saved the city from incurring the charge.
TasWater has said that the corporation's council shareholders had been lumped with the service charge since council water and sewerage infrastructure was transferred to three regional water bodies in 2009.
Councils remained responsible for stormwater infrastructure after the transfer.
The council and TasWater will enter into mediation over the charge next week.
Mr Dobrzynski said it was inappropriate to comment on either the negotiations or the size of the stormwater charge.
``We've recommended a structured mediation process between the council and TasWater, and a fundamental part of that mediation is that it is undertaken confidentially,'' Mr Dobrzynski said.