Ayia Napa Municipality suffers losses of around €10 million a year because of its use of the Koshi household waste management.
The coastal resort is saddled with a huge expense in order to collect the waste daily and send it to Koshi, about 50-60 kilometres away.
Mayor Yiannis Karousos said the cost of managing household waste in 2014 will exceed the municipality's state funding.
State funding is estimated on the basis of a municipality's population and the number of voters in the previous elections while the cost of household waste management is estimated on the basis of municipality's or a community's residents.
Although keeping a team of lifeguards is a state obligation it is also a cost burdening the municipality.
The team costs around €500,000 a year and the Interior Ministry's funding is €120,000 a year which means a loss of €380,000 every year.
Karousos argues his municipality is treated unfairly being number 27 on the funding list with the seventh biggest annual budget while-revenue generated by tourism is not taken into account.
The municipality currently suffers losses amounting to €2m every year.
The mayor said that this year the municipality's state funding will amount to €860,000 which is what Peyia municipality will get even though it is number 28 on the state funding list.
"The injustice lies in the fact that our municipality is one of the last municipalities to receive state funding and one of the first, holding seventh position, on the list of municipalities' annual earnings," Karousos charged.