A declined funding application means the entire cost of the Rangari Road sealing has become the state government's responsibility, Mayor Jamie Chaffey says.
Tamworth MP Kevin Anderson announced $9 million for the sealing of the road on Friday, which will potentially leave the project short of around $3.9 million.
Estimates from a funding application put forward by Gunnedah Shire Council and Tamworth Regional Council about 18 months ago reveal the project will cost $12.9 million.
But this application was knocked back by the state government on the grounds the commitment by Mr Anderson meant the council no longer needed to make a co-contribution to the project.
In a media event on Monday, Mr Anderson repeated his election promise of $9 million more than 20 times, but the documents make it clear that the extra $3.9 million is to be coughed up by his government.
While Gunnedah mayor Jamie Chaffey acknowledged the $9 million commitment, he made it clear that the council would not be making a co-contribution to cover the additional funds needed.
"We were told that it was a state election commitment so therefore the funding application was withdrawn by the state government and no funding allowance has been made in our budget," Cr Chaffey said on Monday morning.
"We believe the shortfall is not the shortfall of the residents of the Gunnedah Shire Council or Tamworth Regional Council.
"It was an election commitment by the state government through our local member and we see squarely the responsibility for funding lies with the state government."
Cr Chaffey said the council would be "very happy" to put forward another application to the state government to cover the shortfall, but he did not want the money to come from the council's own funds.
Mr Anderson said the extra funding would come from Transport for NSW grants if needed.
"The number was $9 million, I was asked to push for $9 million, I went hard for $9 million. I made it very clear, before the last state election, that $9 million was the number I was going for," he said.
"Transport for NSW has already offered support to Gunnedah Shire Council and to Tamworth Regional Council should they require extra funding.
"They're happy to have those discussions with them."
The project is slated to begin construction mid-2021, with planning to be completed at the end of the financial year.