The NSW government has suspended Central Coast Council and appointed an interim administrator due to issues of financial mismanagement.
Local Government Minister Shelley Hancock has appointed Dick Persson as the council's interim administrator for three months, overseeing its governance.
It comes after the NSW government last week coughed up $6.2 million in emergency funding to ensure thousands of council workers and suppliers were paid.
The council had approached the government seeking the funding.
At a council meeting last Monday, Central Coast Council outlined its dire financial position, blaming "a year of natural disasters and the impact of COVID-19".
A statement on its website last week said its budgetary position had deteriorated since March, with its deficit blowing out from $41 million to $89 million.
Under the Local Government Act, the minister is required to provide the council with the opportunity to make a submission before making a final determination on suspension.
Ms Hancock rejected the submission on Friday.
"There is a clear need for greater oversight and control over the council's budget and expenditure to restore its financial sustainability and importantly reinstill the community's trust in the effective functioning of their council," she said in a statement.
Rik Hart will serve alongside Mr Persson and oversee the council's operational recovery.
Mayor Lisa Matthews and councillors will be suspended, but not council staff.
Ms Hancock last week criticised the council's "abject failure to address the consequences of its own financial mismanagement" and accused the council of using its staff as bargaining chips.
Those comments came after the United Services Union lodged urgent proceedings in the NSW Industrial Relations Commission seeking an intervention to ensure workers were paid.