City officials in Mt Hagen in Papua New Guinea have laid off 130 staff and stopped using vehicles due to a lack of operating funds.
The Post Courier reports that many basic city services have not been undertaken for weeks.
It quotes the city manager, Richard Culligan, as saying pleas to the Western Highlands Provincial Government about the financial crisis have been ignored.
Mr Culligan says the city authority's power to collect land rates, which made up the bulk of its revenue, has not been returned to them following the passing of a new organic law more than a year ago.
He says no city land tax revenue has been collected since 2006.