The European Commission's draft 2017 EU budget of €157.7bn in commitments and €134.9bn in payments is being challenged by the member states, who want to reduce it to €156.38bn in commitments and €133.79bn in payments.
But this has sparked a huge row, with some MEPs who warn that it will mean cuts of more than €1.2bn in commitments and €1.1bn in payments.
They caution that such reductions "within the already tight budget will make it very hard" to finance traditional EU policies and new challenges springing from the refugee crisis.
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The row flared again during a debate on Council's position on the 2017 budget in this week's Strasbourg plenary.
Romanian MEP Siegfried Mureşan, the EPP group negotiator on the 2017 EU budget, said, "No citizen in Europe will understand member states advocating the need to restore economic growth and tackle the refugee crisis effectively while proposing cuts to research and innovation, infrastructure and policies aimed at tackling the root causes of migration."
Mureşan said he regretted that, "Instead of making sure that the EU can deliver in key areas in which citizens expect results from us, the Council wants further cuts throughout all headings of the budget."
He said, "The EPP group will fight for appropriate funding for students and youth, for SMEs, researchers and innovators, for farmers and the EU agencies that make Europe more secure and help us tackle the refugee crisis.
"The EU budget will be a tool for investment, supporting job creation and for ensuring the security of our citizens."
Further comment came from the EPP group spokesperson in the budgets committee, José Manuel Fernandes.
The Portuguese MEP said his group "will only accept an EU budget that strengthens investment, promotes employment and further supports innovation and the competitiveness of European companies, as well as prioritising the safety of EU citizens."
Parliament has a say on the final decision on the EU budget and the MEPs' comments this week suggest that the differences between the two sides - Parliament and Council - have become even more entrenched.
Vazil Hudák, chief negotiator for the EU budget of the Slovak Presidency of the Council, hit back at the MEPs' criticisms.
He said, "I believe that the Council's position reflects a balanced approach that makes the most effective use of the EU budget under the current circumstances and constraints."
Hudak added, "The budget targets the available financial resources on our current priorities, provides enough financial leeway to react to unforeseen needs and avoids unnecessary burdens on member states' national budgets by striving to match the budget to actual needs.
"I am confident that together with the European Parliament we can work towards securing a sustainable budget."