Wollongong City Council has known of “difficulties” within the region's aerial patrol for about six months and has withheld its latest payment to the service, according to Lord Mayor Gordon Bradbery.
Wollongong was due to provide payments totaling $25,432 as a subsidy for the shark patrols for 2015/16, a spokesman said.
Council made the first payment in September.
However Cr Bradbery said the second half of the money - which was due in April - was not paid due to concerns over the recent resignation of the patrol's chief pilot and the "accusations that it was having some difficulties".
Despite these issues, Cr Bradbery said he believed the aerial patrol had "delivered on the expectations [of the council] up until recent times".
"The service that they offered was something that was very important for the safety and wellbeing of our swimmers," he said.
"We were one of the first to have anything like a shark patrol, and having this service coordinating with our lifeguards, this was a really significant contribution to the safety on our beaches in Wollongong."
Cr Bradbery said he did not know if there had been any assessment of how effective the aerial patrols had been, except to say that shark attacks had remained low.
He also noted the $25,000 contribution made up "a tiny fraction" of Wollongong council's $12 million aquatic services budget and $5 million lifeguard services budgets.
"This is relatively speaking, a small amount in the great scheme of things," he said.
He said the council would need to look at how it would patrol the beaches before the start of the next peak season.
Shellharbour council gave the aerial patrol $16,588 in 2015/16 and Kiama council provided its annual funding of $2500 in November 2015.
Asked in late March whether the council intended to renew its agreement, a Shellharbour spokeswoman said a meeting “was being sought with the operators of the aerial patrol about its future operations”.
Cr Bradbery said charities and community groups should exercise "good governance and transparency".
"I'm just disappointed that the trust of the community has been violated and let down," he said.