Councils in Gloucestershire said they have been left out of pocket by a shortfall in cash received for the concessionary bus fare scheme.
Four out of six authorities in the county said they received less cash from the government than the scheme was costing them.
A Gloucester City Council spokesman said it received £506,000 from the treasury - a shortfall of nearly £1.3m.
It is believed some councils are now looking to cuts to balance their books.
A number of council chief executives are understood to have written to government minister Ben Bradshaw who has passed the matter on to the Department for Transport (DfT).
The DfT said it was aware of the situation and that it would be looked at in due course.
In Cheltenham the borough council received £525,000 leaving it with a deficit of £600,000.
"The government now spends around £1bn a year on the free bus pass"
Stroud District Council said fares for the over-60s had cost it £693,000.
Tewkesbury Borough Council said its shortfall was around £340,000 and a spokesman indicated it might have to make cuts in services like advice and information, and at sports facilities like Cascades.
The Roses Theatre could also be hit too, he added.
Both Forest of Dean District Council and Cotswold District Councils believed they had made a small profit on the deal.
A DfT spokesperson told BBC News: "The government now spends around £1bn a year on the free bus pass - an important scheme which offers improved transport links to 11 million elderly and disabled people.
"This is why both Gloucester and Cheltenham have each benefited from more than £500,000 of extra funding.
"This represents rises of 55% and 40% respectively on what they spent on concessionary travel in the last reported financial year."
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