Tasmania's forest peace deal has been described as another "land grab" by environmental groups.
An Upper House inquiry is scrutinising legislation needed to protect 504,000 hectares of native forest from logging.
The Dorset Mayor, Barry Jarvis, says a multi-billion dollar industry is being "sacrificed" and the compensation on offer is "paltry".
He has accused the state and federal governments of "pandering" to environmentalists.
"Tasmania must receive a solid guarantee backed by legislation and enforcement that this will end conflict in our forests," Councillor Jarvis said.
"We need a development strategy for regional communities that are being impacted the hardest.
"I'll refer to the government's document of the first $20 million, which you have all got. You can see that some of the most severely impacted communities received not one cent."
The Central Highlands Mayor, Deirdre Flint, also hit out at the way money to help diversify the state's economy is being carved up.
"The next day I got a phone call to say that was off."
The inquiry has heard regional councils will collect less in rates if the peace deal becomes law.
Councillor Jarvis says Dorset would lose more than $100,000.
The Huon Valley Mayor, Robert Armstrong, told Upper House MPs his council is in a similar position.
"We get a rate base now of over $400,000 from forestry, which is probably five per cent of our rates," Councillor Armstrong said.
"We've done a rough estimate of what we could lose out of that plan. We're looking at well over $100,000."
The drop in income would have major ramifications for the Huon Valley Council's budget.
"The community will be losing services," Councillor Armstrong said.
"NRM is what we are looking at, whether we can afford to run our NRM services.
"Children's services we are also looking at. So, you know, they're major programs that we're running that we're looking at, to see whether we'll be able to continue running them."
A former Forestry Tasmania employee, Michael Wood, has raised doubts about whether the legislation is robust enough.
He says it is flawed and will not stop campaigns to destroy timber markets.
"That goes to the heart of my concern about the durability provisions. I don't think they're strong enough," Mr Wood said.
"I don't think there's enough at stake for the environmental movement to keep them honest and to hold them in the agreement, if you like, for the long term."
The Federal Opposition has labelled the Tasmanian Forests Agreement Bill a "death warrant" for industry.
Senator Richard Colbeck has urged MPs against passing the legislation.
"If you sign off on this deal it is effectively signing the death warrant for the Tasmanian native forest industry," Senator Colbeck said.
"Your harvest rates are going to intensify over what they are now if you lock up a whole heap more.
"So what you're doing is effectively squeezing the industry and choking it to death over a long period of time.
"If you look at the projections of the timber that's going to be available, if you harvest at 137,000 cubic metres per year, you'll be out of timber, effectively, by 2030 if it lasts that long."