The Maori Statutory Board is going to the High Court today to challenge a decision by the Auckland Council last night to slash its budget.

Councillors voted narrowly to cut its budget for the rest of the financial year from $2,066,000 to $950,000 and from $3,435,500 to an indicative $1.9 million in the 2011-2012 draft annual plan, which is up for consultation.

But moves to cut this year's budget to $850,000 and defer the 2011-2012 allocation until the Government clarifies its intentions for the unelected board were defeated.

Immediately after last night's four-hour debate on the funding, board chairman David Taipari said the matter would move to the court for a declaratory judgment.

"In our view, the legislation that set up the board was quite clear. The council must reach a funding agreement with the board by February 15 [today] and meet the reasonable costs of the board's operations, secretariat and independent advisers.

"Our reading of the law is that, if our proposed costs are reasonable, the council has no discretion about meeting those costs, so tonight's council decision is probably in breach of the law."

Mr Taipari said the board had taken significant steps to ensure its costs were reasonable, had sought the help of an independent consultant and worked with council officers to identify a reasonable level of funding. Furthermore, the council's finance committee voted unanimously last week in favour of the funding agreement.

Council chief executive Doug McKay said he needed to take advice on whether the council decisions were valid in terms of its legal obligations.

Mayor Len Brown tried to put a positive spin on the budget flip-flop and played down the looming legal battle Maori head to court as council takes machete to budget and its cost to ratepayers.

Mr Brown praised councillors for reaching a reasonable budget that represented the sometimes-emotive view of the community.

He said the board was entitled to seek a declaratory judgment, which normally was dealt with quickly.

Asked what would happen if the board won, Mr Brown said: "We will deal with that at the time. But we have made the decision today with the best information to hand after a long process of debate ... and a budget we want to work forward from."

The council also voted to formally request the Government to clarify the intentions of its legislation, and set up a working part of three councillors - Alf Filipaina, Des Morrison and Penny Webster - to work with the Maori board to agree on a final budget and work plan for 2011-2012.

Mrs Webster, who chairs the finance committee, said the council had to be mature and give the board the resources it needed, ask the Government for back-up and move on.

Other councillors did not believe there was a place for an unelected Maori board to appoint members and have voting rights on 11 council committees.

"This is not going to please ratepayers," Sir John Walker said.

Mike Lee, who tried to throw the matter back to the Government for clarification of the law before the budget was finalised, said what happened would influence the constitutional development of the country.

"This issue is that important."

$3.4m - budget agreed last week.

$1.9m - budget suggested last night.