Darlington Borough Council has refused to increase the amount it pays to parish councils.
Heighington Parish Council requested an increase in funding for projects.
But at a meeting between the parish councils and the borough council next week, the request is likely to be turned down.
Parish councils raise money for specific projects through the council tax. They notify the borough council of proposed projects, the cost of which are then included in calculation of council tax charges.
But in Darlington, the council also pays grants to parishes. For this financial year, the council has given £28,683 to 13 parishes.
Explaining the decision not to give further funding, a council spokesman said: "Normally, if parish councils want extra funding they raise it through precepts on the council tax. Also, there has been no formal request from Heighington saying what they want the money for."
The spokesman also said Government consultation was being carried out into the relationship between town and parish councils, and it would be unwise to make any changes to funding until that had been completed.
He said: "The whole relationship between the councils could change, and so now would not be the time to change funding."
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