Taxpayers across Barnsley could be saddled with debt of more than £1 million if Brierley Town Council folds because of its former clerk's swindling.
Jan Cooper was jailed for eight years earlier this month after she admitted stealing almost £300,000 and fraudulently signing the town council up for loans of £700,000, in a swindling spree committed over three years.
But, at a packed public meeting in Grimethorpe Welfare Hall on Wednesday, people were told the debts, including an additional £500,000 loan from Barnsley Council, would still have to be paid by taxpayers across Barnsley even if the town council folded.
Rob Winter, of Barnsley Council, said a cabinet meeting would be held next month to look at reviewing the need for the town council.
If agreed, the 12-month review would start next year. A petition calling for the town council's abolition was collected in 2011 with about 1,400 people saying they no longer wanted it.
This was handed into the Barnsley Council but has to be shelved until the outcome of the case against Cooper.
In the wake of the revelations, residents have seen services cut, while there has been a huge hike in the precept.
Cooper, 52, who had a history of false accounting and theft from employers, had been jailed for three years in 2003 after stealing £800,000 from her employers.
Her crimes also featured in a 2004 Channel 4 documentary but she was still employed by Brierley Town Council in 2006 - earning up to £26,000 a year.
She forged council minutes along with councillors' signatures to get the loans and funds were moved into her own bank accounts.
She told the council the loans were grants and used building work on council properties as a way of covering her tracks by fabricating invoices.
Rob Winter said a good reference had been received from her previous employer and she had also made up some of her employment history.