The Transport Agency says it is reviewing the funding formula for local roads, to deal with what it believes are unfair allocations for some councils.
The Dunedin City Council was told its subsidy would drop from 59 cents in the dollar, to 52 cents, over nine years.
The Clutha District Council was facing a cut from 62 to 51 cents in the dollar.
A regional director for the agency, Jenny Chetwynd, told Checkpoint the assessments were not complete, and there might be more money for some councils, once the roading needs of all of them had been assessed.
The Clutha District Mayor, Bryan Cadogan, said his ratepayers would be forced to accept inferior quality roads, if the Transport Agency did cut a Government subsidy for roads.
Mr Cadogan said the transport minister hasn't signed off on the deal yet, but it's not looking good for his area.
He said if Gerry Brownlee gave it the green light, Clutha ratepayers would end up paying more than 80 percent of their rates to cover the cost of rural roads.
The Transport Agency declined not comment and Mr Brownlee said nothing had been decided.