The council's allocation of financial assistance grants in the coming financial year has been cut by more than half, offering $56,500 less to community groups than in the previous financial year.

Lithgow City Council has allocated a total of $47,954 in financial assistance in the 2019/20 Operations Plan, down from the $106,500 allocated in 2018/19.

Chief financial and information officer Ross Gurney said, as per council's adopted long term financial plan, the administration presented a balanced operating budget to council.

"We needed to focus on providing priority services for residents and we severely had to reduce a number of budgeting areas, and the Financial Assistance Grants was one of those," he said.

Councillors were presented with a report of recommendations from the Community Development Committee on projects to receive 2019/20 round one Non-Recurrent Financial Assistance at its regular meeting on Monday, June 24.

Council originally called for submissions during April 2019 from not-for-profit organisations for Round One of the Non-Recurrent Financial Assistance with 24 applications received to the value of $87,076.

These were then considered by the Community Development Committee on June 11, which recommended 16 projects to the value of $38,704.

Some big cuts were, including in council's contributions to Arts OutWest, which requested $10,000. It was granted $4000. Closer to home, Lithgow Show Society's request of $16,000 resulting in a $7500 allocation.

Community Development Committee chairperson Cr Cassandra Coleman said she was concerned that the funds had been cut.

"I am particularly worried about Arts OutWest, the group really struggled seeing this report and the cutting of their funds from $10,000 down to $4000," she said.

Council's manager of organisational development Michael McGrath said that council had an understanding with Arts OutWest which expired in June 2018.

"The memorandum of understanding was linked with CENTROC [Central West Regional Organisation of Councils] and because we are no longer members of CENTROC, that agreement basically expired and wasn't renewed," he said.

Cr Coleman said she was also concerned about the Lithgow Show Society.

"I know they have struggled in the past few years," she said.

"The committee worked really hard, we poured over applications, going back and forth, I would love to give money to everybody but we just don't have the finances."

Due to financial cuts, there will not be a second round of grants, as there were in previous years.

"We use to do two rounds but we don't have any funds left for a round two, which is disappointing," she said.

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Cr Maree Statham said struggling groups should be prioritised.

"Why should we be propping up people who have healthy bank accounts? We should be giving to those who use the money and only keep enough to do the event again the following year," she said.

"We have to look after our committees and those volunteers."

Lithgow City Council general manager Graeme Faulkner said the council had been on a journey for the last couple of years.

"The council itself doesn't have a lot of money, and there has been cutting back across all boards, so we aren't just taking this money and spending it elsewhere," he said.

"This really reflects our financial situation."

Cr Deanna Goodsell said that, despite the fact that $87,000 was requested, many of organisations didn't meet the criteria.

Cr Steve Ring also made an amendment to the recommendation, asking that council's administration provide a report on Arts OutWest and bring it to the next council meeting.

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