Mid Ulster District Council is fighting the Department for Communities in the courts over the way rates support grants are worked out.
In judicial review papers seen by the Mail, the council argues that the formula used by Stormont to top up rates paid to each of the 11 districts disadvantages Mid Ulster and two other councils.
The method used, which is in section 27 of the Local Government Finance Act (NI) 2011, offsets a district’s wealth against its needs, but how the wealth of each area is determined is at the heart of the issue.
The council argues that a specific council conversion factor should be used instead of a Northern Ireland average.
They have also raised concerns around dates on which properties in each area were valued in relation to rates.
Belfast City Council out-earns the poorest district in Northern Ireland - Fermanagh and Omagh - by over £110m.
The council believes the methodology used to distribute the rates support grant is flawed and to its disadvantage financiallyMid Ulster District Council
As it stands, when rates paid to each council by the Department of Finance in 2015/16 are added to the most recent Rates Support Grants - aside from Derry and Strabane, nationalist majority councils are worse off on the whole per head of population.
Only Lisburn and Castlereagh - which could benefit from Belfast’s sizeable income - lags behind them when the money each council has to spend is divided by the number it serves.
Department for Communities said: “The (rates support) grant provides financial support to those councils whose needs exceed wealth in comparison to other councils.
“Needs are based on the adjusted population of each council, adjusted for deprivation, influx of population and sparsity. Wealth is based on the value of hereditaments (property/land) in each council area as extracted from the rating valuation lists.”
Mid Ulster, with a population of 141,434 (as of the last census) has been awarded a rates support grant of £2.96m for 2016/17- but in papers submitted to the Crown Court, they argued that if a council specific formula had been used they would have been given another £975,370.
Mr Justice Colton, however, found in favour of the department - but Mid Ulster Council has lodged an appeal.
A spokesperson said: “The council believes the methodology used to distribute the rates support grant is flawed and to its disadvantage financially.”