The Minister for the Environment is to examine a report from Tralee Town Council before making a decision on its future.
Mr Cullen may be forced to appoint a commissioner to run the council after it last night failed to agree a budget for the year.
A spokeswoman for the Department of the Environment said the minister would consider the report he expected to receive from the council before making a final decision. Mr Cullen may also opt to
grant the council an extension in time to allow them a further chance to agree a budget.
The council failed to adopt a budget after racking up crippling debts through supporting a number of tourism projects, including the famine ship Jeanie Johnston.
The council refused to agree a budget for the coming year for the fourth time last night despite knowing it faced dissolution when the deadline for agreement passed at midnight.
Members voted by 11 to 1 to reject the budget and effectively voted themselves out of office as the deadline passed.
Loan repayments and charges of more than €700,000 for tourism projects have crippled the council's finances. The costs include the annual repayments of €235,000 on a loan taken out two years ago to bail out the Jeanie Johnston.
The council asked for extra government funding to help pay this debt, claiming the boat is a national project, but its request was turned down.
The council's debts meant it could not afford the €250,000 cost of running its refuse collection service for the coming year.
"We need to drop something big, or drop ourselves," Tralee's mayor, Mr Terry O'Brien, told his fellow councillors ahead of the vote - and they appeared to opt for the latter option.