At the last council meeting, Newcastle councillors voted to participate in the NSW Public Library Associations' campaign asking the state government to pick up a bigger share of public library running costs.

NSW local councils receive the lowest per-capita funding for public libraries across all the state governments in Australia, coughing up 93 per cent of the costs to operate.

In the last financial year, Newcastle libraries spent more than $9.3 million, but only received $387,500 from the state government in grants.

Newcastle's Library Services manager David Jenkins said libraries were often the most well-used and valued public facilities in the community.

He said service levels at Newcastle Region Library were at risk due to deteriorating state funding.

"Our local public library plays a very important part in our community life," he said.

"Libraries bring people together, facilitate learning, connect us with information and ideas and provide a wonderful source of recreational pleasure."

Newcastle councillor Nuatali Nelmes said it was a disgrace that the state government did not contribute more.

She said in 1980 the state's contribution to public libraries was closer to 23 per cent, compared to the 7 per cent today.

Cr Michael Osborne said Newcastle libraries were greatly disadvantaged compared to other local governments because the state government only picked up 4.2 per cent of Newcastle council's operating costs.

Newcastle council is still battling to bring its budget back into surplus after it revealed in 2013 it was operating with a $30 million deficit.

In council papers distributed to councillors, staff noted that if no changes were made, the council was a facing "a potential increasing financial burden to provide library services to the community".

The state government is due to hand down its next budget later this month.

Meanwhile, the council has set up petitions in its libraries for the public to sign.

It will also write to the state minister for arts, asking for a funding reform.