The controversial council reforms were intended to save money and improve efficiency, but John Knight said the new Cootamundra-Gundagai council was $2.5 million worse off.

“The administrators and the government promised proposed savings across the board,” Mr Knight said.

“Now we find out from the Save our Councils Coalition that councils all over country and regional NSW are failing well short of promised surpluses.”

Mr Knight accused the Berejiklian government of robbing small communities of their identities while trying to control council decisions.

In response to the accusations of financial mismanagement, an Office of Local Government spokeswoman said newly-merged councils across the state had reported more than $50 million in savings since March.

“These savings are funding more services and local infrastructure for residents and ratepayers,” she said.

“Financial achievements are not the sole benefit of new councils, (they) are also increasing discounts on rates for pensioners and delivering hundreds of long-awaited local projects across the state, reducing the backlog of infrastructure.”

Water main upgrades in Harden were cited as an example of cost savings, which the spokeswoman said allowed more money for other projects. However, budget blowouts were also being reported in merged Sydney councils, with Inner West administrator Richard Pearson saying the mergers weren’t worth it on paper.

“I think quite a few councils are finding that (government consultant) figures were somewhat optimistic,” Mr Pearson said. “Unless you can actually prove to a bigger community that you do have a stronger voice, I don’t think mergers are worth doing.”

The continued anger at council mergers are expected to be a major factor at the Cootamundra state by-election, after the Shooters, Fishers and Farmers party scooped the seat of Orange with a similar campaign last year.

Mr Knight said Gundagai was paying the price for the state government’s “pig-headedness” and that the Nationals would suffer.

“When they won at Orange they showed they were respectful and responsive to rural and regional people, which is what the Nats should be doing,” he said.

Cootamundra Gundagai Regional Council did not respond to requests for comment.