The City of Parramatta has gone to battle with Hornsby Shire Council, claiming the municipality on Sydney's north owes it millions of ratepayers' dollars.
As the fallout from the New South Wales Government's decision to abandon forced council amalgamation continues, Parramatta issued Hornsby a bill for $22 million.
Hornsby Council is holding on to council rates it collected from thousands of residents that now fall under the City of Parramatta.
"We don't deny it. My duty is to the residents of Hornsby and I'm not going to see them hardly done by in this procedure," Hornsby Mayor Steve Russell said.
Hornsby Shire lost parts of Beecroft, Epping and Carlingford to Parramatta, because it was supposed to amalgamate with the neighbouring Ku-ring-gai Council.
Now that merger is not going ahead, Hornsby's population has reduced by about 15,000.
"We've been using this in our negotiations with Parramatta and the State Government," Cr Russell said.
"I mean the State Government is responsible for this mess."
Complicating matters is the looming local government elections in NSW, set to be held on September 9.
Former long-time Liberal MP Philip Ruddock, who served as Federal Attorney-General between 2003 and 2007, is a mayoral candidate in Hornsby.
The Greens have asked the NSW Local Government Minister Gabrielle Upton to step in and compel Hornsby to pay the $22 million.
The Minister said she was looking at options to ensure Hornsby Shire Council would not be worse off.
