The state government has allocated a $15 million "Stronger Communities Fund" for each merged council, to be spent on projects such as parks, paths, and roads. The fund comes on top of up to $10 million for a merged council to cover the costs of merging.

According to guidelines released last week for the Stronger Communities Fund, merged councils will be responsible for nominating projects on which to spend the fund by the end of the year.

That will be well before council elections for newly merged councils are due to take place in September 2017.

In the absence of elected councillors making decisions about where to spend the money, a panel made up of administrators, a state member of parliament, a bureaucrat from the Department of Premier and Cabinet, and a probity adviser as well as others nominated by the administrator will be responsible for allocating the funds.

"That's one of the downsides to the process we are going through," said Keith Rhoades, president of Local Government NSW.

Cr Rhoades said a problem was that administrators would not be obliged to direct funding to projects already identified by elected councillors. And he said administrators would have fewer contacts with the community, than would multiple elected councillors.

"The access for the community is by no means what it was," he said.

Under the guidelines, up to $1 million of the $15 million can be distributed to community groups in grants of up to $50,000. The rest of the funding has to be allocated to a project that was not previously funded by the council.

A spokesman for Local Government Minister Paul Toole said councils "must consult with their communities in deciding how to invest their Stronger Communities Fund allocation."

"Councils must set up a panel, which will include an independent probity adviser, to assess projects and make recommendations for funding," the spokesman said. "This will ensure rigorous accountability and integrity in investment decisions."