Caerphilly council has been accused of lacking "Christmas cheer" by the opposition Plaid Cymru group.
But council leader Keith Reynolds said it has made cuts to protect key services.
The ruling Labour group said the decision was taken "reluctantly" but it had to save £12m for 2015-16.
Plaid's Colin Mann said: "It will be really disappointing if our town centres don't have any Christmas cheer this year with the lighting cancelled."
He said the lighting was available, but there is no money to pay contractors to put up and dismantle it.
There will be no Christmas lights in towns around Caerphilly county this year after funding was cut.