Port Stephens Council made the counter-proposal in February as its preferred alternative to a Newcastle merger.

Meanwhile the Office of Local Government has begun a review of the proposed Dungog-Maitland merger.

To support its campaign Port Stephens Council has committed $20,000 to specifically raise public awareness and support for the option.

Cr John Nell voted for the budget on Tuesday night.

“The merger between Dungog and Port Stephens is a sensible one when there are a lot of similar sized villages compared to Newcastle,” he said.

Councillors acknowledged that while discussions with Dungog residents went well, it’s past talks with Dungog Shire Council did not.

The mayor of Port Stephens, Cr Bruce MacKenzie, blamed “a letter” from one of his councillors warning Dungog to expect bully-boy tactics.

“I would say the author of the letter wouldn’t have the guts to have this letter printer in the Examiner,” he said.

Cr Geoff Dingle did not admit ownership but suggested Cr MacKenzie was only upset because “the truth hurts”.

The council previously approved $200,000 to fight off the Newcastle merger. Cr Dingle asked how much remained and the general manager said, “about $10,000”.

Three public inquiries have been scheduled. They are for 12am to 4pm June 8 at Nelson Bay Diggers, 7pm to 10pm June 8 at Raymond Terrace Bowling Club, and 7pm to 10pm June 9 at Dungog Memorial RSL.

Submissions will remain open until June 26.