The Taupo District Council is warning up to 40 jobs could go as it trims $8 million from its budget.
The North Island council says a downturn in growth and development projects has reduced income and unless changes are made rates will have to be increased to an unacceptable level.
Council chief executive Rob Williams says a review will be carried out to identify where savings can be made.
Mr Williams says about $2 million will need to come off salaries, which would mean shedding between 30 and 40 positions.
Voluntary redundancies will be considered before any final decisions are made in March.
Mr Williams says the council's budget of $78 million needs to be trimmed by 10% to make sure any future rate increases are sustainable.
He is hopeful there will not be any reduction of services the council provides residents.