The council had originally budgeted on receiving more than $7 million from Canberra under the annual Financial Assistance Grants.

A freeze on indexation of the grants was announced with the federal budget and in June the council forecast it could be forced to make changes.

This week federal member for Parkes Mark Coulton advised Dubbo council would receive $6,796,389 as he said the Coalition was "committed to supporting local communities to deliver the services and facilities they need".

He said the federal government was providing $715.7 million to NSW councils in 2014-15 alone, and councils in the Parkes electorate would receive a total of $82,461,541 this financial year.

"We will deliver a further $9.3 billion to local governments from 2014-15 to 2018-19 through the Financial Assistance Grants program to deliver services and build community infrastructure," he said.

"Councils are free to spend this untied grant funding according to local priorities, including for infrastructure, health, recreation, environment, employment and roads projects.

"The first quarterly payment for 2014-15 has been made.

"I am looking forward to seeing our local councils target local priorities with this funding, along with additional funding provided by the federal government under the Roads to Recovery, Black Spot and Bridges Renewal programs."

Local Government NSW (LGNSW) said councils faced the "harsh reality of a $30 million federal budget shortfall" with the first round of payments.

LGNSW president of Keith Rhoades AFSM said the decision on the grants was "only the tip of the iceberg".

"Over the next four years, NSW councils are facing a projected shortfall of $288 million," he said.

"The communities hardest hit by the freeze will be those in rural and regional council areas, which rely more heavily on Financial Assistance Grants due to their small rate bases and extensive road networks.

"The freeze on these vital grants will have a significant impact on the lives of everyday Australians who are used to, and expect, quality services, roads and facilities from their councils."

In June a report from general manager Mark Riley forecast a mix of gains and losses for Dubbo council from the federal budget that overall would leave it an estimated $1.3 million worse off during the next four years.

It was noted in the report that any proposed required amendments to the council's budget would be considered at its October meeting, after Parliament had dealt with the federal budget.