The council is in the process of updating its draft long term plan ahead of its adoption later next month and Mr Cadogan said the council was alarmed by an indication of reduced funding from the Government.
In a submission to the Clutha District Council's draft long term-plan, council staff said a total of $38.5 million was requested from the New Zealand Transport Agency for the 2012 to 2015 period.
Initial indications from NZTA showed the council would probably be granted only $36.1 million for the three-year period.
"When you get a continual reduction in the amount the Government is giving us, there is no leeway for planning.
"Our roading network is in decline."
The Clutha district has the third largest roading network in New Zealand.
The staff submission suggested the council consider four options in order to deal with the potential drop in roading funding.
The first option suggests the council reduces the budget for 2012-15 by $325,000 a year, with a net 1.4% annual reduction in rates.
Another option is for the council to retain the budget for 2012-15 and use the $325,000 per year on non-assisted roading activities such as seal extensions, or dust suppressions.
The third option also retains the rates for 2012-15, using the $325,000 per year to increase the deferred roading maintenance fund.
The last option advocates a combination of the previous three suggestions.
A similar situation occurred in 2009, resulting in a $400,000 surplus due to budget reductions.
The surplus was used to increase the deferred roading maintenance fund.
Any reductions in the overall roading funding would probably reduce rural rates rather than urban areas, as 90% of roading rates are from rural ratepayers.
Most of the submissions made by Clutha ratepayers to the draft plan about roading requested more sealed roads and improved maintenance of roads, both sealed and gravel.
A decline in roading funding would mean the council would be less likely to be able to grant these requests for road upgrades.
Confirmation of the funding levels from NZTA is expected by the end of the month.
The council will meet to discuss changes to the draft long term plan next Thursday.
