The head of Local Government NSW Mayor Darcy Byrne has said that councils have been left in a perilous financial situation with delays to disaster recovery funding.

Mayor Byrne gave evidence last Friday at the Parliamentary Inquiry into the operations of the NSW Reconstruction Authority and detailed the urgent need for payments to be expedited.

According to Mr Byrne the exponential increase in disaster costs for local communities and those across the state in recent years have left councils facing financial crises which will worsen if the funding doesn't start to flow through urgently.

He also highlighted the need for a more streamlined payment of claims to councils and a greater investment in long term resilience to avoid the impacts of disasters in the first place.

"The massive increase in floods, storms and fires across NSW has devastated many local councils and their communities," Mr Byrne said.

"While the Reconstruction Authority is improving, the system for processing claims is inadequate with payments totalling hundreds of millions of dollars overdue to councils who are struggling with recovery."

Mr Byrne acknowledged there are Members of Parliament who are taking up the fight in an attempt to 'fix this broken system.'

"And the need of these communities is urgent and cannot be ignored," he said.

According to Mr Byrne, just as two examples, the MidCoast Council and Kempsey Council have both been left out of pocket as they await the promised funds.

"In the MidCoast Council area, the floods had an impact of $226.5 million on Council Transport and Infrastructure.

"To date, Council has spent $43 million on emergency and immediate reconstruction works on their transport network and has only received $6.1 million from the NSW Reconstruction Authority.

"In the nearby council area of Kempsey, there was a $115 million impact, and that council has only received $5.7 million in funding."

LGNSW has some serious concerns over the financial sustainability within the sector and believes that the red tape being placed on Councils is contributing to the issue.

"We know the local government sevtor is facing some real challenges with financial stability, particularly in rural, regional and remote communities," Mr Byrne said.

"Having these unpaid claims on the books threatens the financial viability of these severely impacted Councils.

"Too often we're seeing claims for funding getting bogged down in red tape - leaving these Councils out of pocket - often by millions of dollars for months if not years on end.

"This is grossly unfair, with Councils facing a financial crisis that is absolutely not of their making.

"The harm from natural disasters is being compounded by bureaucratic delays."

On behalf of LGNSW Mr Byrne is calling for immediate improvements to funding, coordination and resilience planning to protect communities immediately and into the future.

"We are calling for greater transparency from the NSW Reconstruction Authority in order to drive improvement," he said.

"As a starting point, we want them to transparently publish data clearly showing the number of claims received, how many have been approved and paid and also detail the decision making and processing timelines."