The move by Leeds comes as research by The Yorkshire Post reveals councils are holding on to more than £20m of so-called Section 106 money given in planning applications from just the past five years.
In Rotherham more than £2m was still unspent as of March this year and in Doncaster more than £4m as of July, requests under the Freedom of Information Act show.
In Richmondshire, North Yorkshire, more than £2m is yet to be spent including a £51,200 payment towards affordable housing, £319,506 towards additional education facilities within Colburn, Hipswell and Scotton and £66,500 for road improvements.
Much of the money has not even been received.
Budget proposals in Leeds say the council has a total of £32.1m of Section 106 money earmarked on its balance sheet. This includes £8m from over the past five years.
It is proposed - if possible legally - to use some of the money ‘to support the 2018/19 revenue budget’. Around £1.6m is expected to be used.
Coun Barry Anderson, shadow executive member for communities, raised concern over the move and the amount of money unspent.
He said: “It must be remembered that planning contributions are paid to benefit existing communities who need additional infrastructure and services as a result of new housing in their area. Residents will rightly wonder why the money, dating back five years in some cases, remains unspent when new housing, which is often unpopular, has been in place for such a long time.
“Leeds is crying out for improved highways, new schools and other services to support new housing development and really the council should be spending this at the earliest opportunity.”
He added: “I am concerned about the council’s initial budget proposals which could give greater concern to local residents in terms of how s106 funding is being used.”
North Yorkshire councillor John Blackie said there needed to be ‘serious questions asked’ over the amount of money unspent in Richmondshire for affordable housing.
Elsewhere in the region Sheffield has collected £16.7m of Section 106 funding in the last five years, of which £13m has been allocated, but, the remaining £3.7m has not yet been formally committed.
In East Riding just over £30O,000 contributions for affordable housing remain unspent.
North Lincolnshire Council said £848,121 had been committed but not yet spent.
Councils insist the money is often subject to restrictions and can be for projects that take time or money is held and then pooled for larger schemes.
Leeds insisted they would still fulfil all Section 106 expenditure commitments.
The council also said with this money they aimed to invest in projects to benefit communities and meet local needs and priorities.
“Whilst we always try to ensure Section 106 money is spent in a timely way, often the funds are allocated to significant capital projects which can take time to programme,” a spokesman said.
“Section 106 funds are also sometimes earmarked to fund specific local schemes, which can involve pooling money from different sources and waiting for the full sum to be collected before it can be spent.”
Richmondshire Council said that affordable homes had been built in the area.