Donegal County Council is facing serious financial difficulties over its waste management programme.
It requires up to €20 million to fund its waste capital programme but has been informed that no capital grants are available.
Councillors have been told that an urgently required extension to the county's only operational landfill site will not be issued by the Office of Environmental Enforcement until pollution problems are addressed.
The cost of remedial works at Ballinacarrick, outside Ballintra, is estimated at €800,000 and tenders are now being sought.
But Mr Jim Holohan, the council's director of water, environment and emergency services, has warned that the remaining capacity at the landfill "may be used up early next year" and the county could be left with no operational landfill site.
"There is no guarantee that the extension will be operational in time to take over from the existing cell," he said.
In a circular to councillors, he also revealed that the council is "experiencing cash shortages due to late payment by some refuse collectors". The amount outstanding is now €700,000 and court proceedings have now been initiated.
This, he said, was "creating serious difficulties" and has led to a delay in "remediation works" at Ballinacarrick and a number of closed landfill sites. The EPA has instructed the council to remove leachate from a number of old landfill sites and warned of further enforcement measures.
Meanwhile, the council is recruiting four extra staff to deal with litter and illegal dumping. It is also mounting vehicle checkpoints at Border locations to ensure no waste material goes into Northern Ireland.
Householders in the county are now facing further price rises in collection charges from private refuse collectors.
Levies on waste collection firms rose this month from €100 to €125 per tonne of waste delivered to landfill sites. But Mr Holohan warned that charges could rise a further €60-€100 per tonne delivered to landfill sites. This will, in turn, be passed on to householders.