The cost of a planned multiplex, owned by Caerphilly County Borough Council, is set to exceed its budget of £6.9 million.
Councillors were presented with the news in a report to the authority’s Regeneration and Environment Scrutiny Committee on Tuesday May 20.
National cinema chain Odeon has been lined up as the council’s preferred bidder to lease the cinema once it is complete.
The cinema development is part of the second phase of regeneration for Bargoed and will be situated next to the town’s Morrisons supermarket, which opened in December last year.
Following the tender process for the cinema development’s construction and fit out, a review concluded the cost is likely to exceed the project budget of £6.9m.
Council officers are now trying to plug the funding hole.
Council leader Keith Reynolds said the authority remains committed to the cinema development.
He said: “I want to assure the people of Bargoed and the surrounding communities that we remain 100% committed to bringing a cinema to Bargoed town centre.
“We don’t currently have a multiplex cinema within the county borough, and, with a population of over 180,000 residents, it is a much-needed leisure facility for our residents.
“We will continue to work in partnership with Odeon to bring this project to fruition.”
The council is now in discussions with Welsh Government about extra funding.
Cllr Reynolds added: “Once a way forward is agreed, both the council and Odeon will be issuing a joint statement and it is hoped that this can happen soon.”
Meanwhile, councillors sitting on the scrutiny committee were also told the council had secured an extra £1.1m from the European Regional Development Fund – originally announced in December last year.
Because of the extra funding, five more regeneration projects are taking place in Bargoed town centre.
The projects include improving roads, knocking down a number of derelict building and improvements at Hanbury Road car park.
Cllr Ken James, Cabinet Member for Regeneration, said: “Bargoed town centre has been totally transformed over recent years thanks to an ambitious programme of works, which has helped breathe new life into the town.
“Added to this, we welcomed Morrisons as the flagship store to the town at the end of last year – and the regeneration works just keep on going.
“These five additional projects will greatly complement the works undertaken to date in the town, and help us place Bargoed as a key destination of choice for residents, shoppers and businesses alike”.