Dorset County Council overspent its highways maintenance budget during both of the last two financial years, the BBC has learned.
Despite busting its £8.2m budget, the Conservative-led authority has cut the money earmarked for roads for the third year running.
The county council needs to save £27m from its overall budget in 2011-12.
The figures were released by the council following a Freedom of Information request by the BBC.
The county council earmarked £8.7m for repairs in 2009-10 but spent £9.9m.
In 2010-11 its highways budget was £8.2m but the authority estimated that it spent about £9m.
Its roads maintenance budget for 2011-12 is £7.5m.
Peter Finney, the county's cabinet member for highways and transportation, said: "The biggest factor is that the majority of rural roads in the county are old car tracks that have been built up over the years - they were never intended to be full scale roads and their construction is not suitable for the amount of traffic that uses them.
"We will receive some money for pothole repairs because of the severe winter conditions and we will start to put that towards mending the potholes as quickly as we can."
In addition to repairs spending, the county council received almost £180,000-worth of compensation claims over potholes in 2010 but only paid out £15,000.
The authority said it received 386 pothole-related claims in the last calendar year, 113 more than in 2009, but only a handful were successful.
Successful claimants received, on average, around £1,280.
The Borough of Poole, one of two unitary authorities in Dorset, said its insurance cover meant it had not made any payments but its insurance provider had paid out a total of £910 in 2008-09 and £239 in 2009-10 in response to pothole claims.
The Conservative-led council warned that it may be forced leave some road defects unrepaired if its budget is unable to meet the demand. Last year it spent £486,000 on highways maintenance despite having a budget of £320,000.
Its roads budget for the current year financial year is £501,000.
Poole's transport councillor Ron Parker said: "We are doing all we can to keep our highway safe and in a good condition, primarily targeting resources towards repairing potholes as soon as possible once we are made aware of them."
Neighbouring Bournemouth Borough Council managed to spend less than planned on roads in 2009-10. It spent £1,124,000 on "reactive maintenance" against a budget of £1,146,000.
The Conservative-led unitary authority spent £76,720 on pothole claims made in 2009-10, compared with £47,719 the previous year.
Transport councillor Michael Filer said: "There have been two very severe winters, and we are not used to snow in Bournemouth, and it's had a very damaging effect on our roads."
But Mr Filer said monthly meetings and quick responses meant that reported potholes in the borough were dealt with efficiently.
Last week the council announced it would invest an extra £300,000 in resurfacing work, including an extra £150,000 for pothole repairs. Its budget for reactive maintenance for the current year was set at £2m.
The government announced last week that it would make £100m available for councils to bid for if they felt they had been badly affected by potholes.
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