Shellharbour Mayor Marianne Saliba said she understands Wollongong City Council's rejection of a NSW government plan to hand over millions of dollars of Lake Illawarra Authority infrastructure and management costs, unless state funds of more than $22 million over the next 10 years are guaranteed.
Wollongong council's decision further delays the establishment of an estuary management committee to oversee Lake Illawarra to replace the LIA. The LIA board was disbanded by the NSW government last July.
Shellharbour council agreed to the new estuary management committee and to take on former LIA assets in December, however Cr Saliba said Wollongong was inheriting more assets and costs.
"The biggest problem is the uncertainty and the perception it gives that no-one is looking after the lake," Cr Saliba said.
"The state government still have a responsibility to be looking after the lake until this is finalised."
Cr Saliba said her council took a "philosophical approach" to the government's decision.
"We took the approach the government had made a decision and we couldn't overturn it ... although they have absolutely screwed up this process."
Meantime, Shellharbour MP Anna Watson repeated her call for the LIA to be re-established.
"The Lake Illawarra Authority was and remains a successful model. It should be re-established, not abolished," she said.