The region's councils will see their spending power cut by 1.7% next year in a settlement the Local Government Secretary has described as a "bargain" for authorities.
It means yet more savings will have to be made on top of the millions already being slashed from budgets.
Eric Pickles said the settlement will leave councils with considerable total spending power and denied the North East was losing out.
But authorities, who are still breaking down the figures, say the announcement will mean more cuts. Newcastle City Council is already cutting £90 million and 1300 jobs over the next three years.
Middlesbrough Council is looking at 220 potential job losses and £11 million of savings and a further £2.4 million the following year.
Mayor, Ray Mallon, is also looking at increasing council tax by 2% to help balance the books.
Last night, he outlined his recommendations for cuts to the 2013/14 budget following a six week public consultation on more than 100 proposals. Some of the services which had been in line for cuts have either been saved or have a reprieve:
- Hemlington Library will stay open with the help of a volunteer-supported service
- Some disabled staff at Ayresome Industries, which relies on council grants, have been given a reprieve
- CCTV throughout the town will remain
- Green waste collections will continue
But the Mayor is warning savings have to be made.
A further five week consultation period is now underway to achieve the additional savings of £2.4 million.
Councillors will discuss the issues in the New Year.
To find out how your local council will be affected click here.