A city watchdog committee will challenge the Labour council's decision to give £155,000 funding to a Broad Street business group.
Coun Victoria Quinn, who chairs the council's economy scrutiny committee, described the decision as "appalling" and has lodged an official challenge, known as a call in.
Labour council leader Sir Albert Bore, who happens to be her husband, had earlier defended the decision to fund the Broad Street Business Improvement District (BID) during the transition to its relaunch as the Westside BID.
The BID had failed to ballot members over its relaunch by March 31 and, as a result, has been unable to raise the money to fund its street cleaning, security, taxi marshals and other activities until a ballot is held next month.
Coun Bore (Lab Ladywood) also told his cabinet that Broad Street, despite being one of the wealthier BIDs in Birmingham, was not getting preferential treatment even though the council had agreed to pay about £120,000 over five years to issue bills and collect the levy from local businesses.
Other BIDs face having this subsidy removed following consultation later this year as part of the city council's budget cuts.
Sir Albert said: "We are currently subsidising every BID in the city. We are looking at whether this will be maintained in the future."
Coun Quinn (Lab Sparkbrook) said she was appalled that BIDs in her area had been "hampered" by council interference while Broad Street, with questions over its ballot being delayed, was being "bailed out".
"This decision has implications for every other BID in the city," she added.
She urged the cabinet to pull the decision but, when it went ahead, announced her intention to call it in.
This means the cabinet member for economy must defend his decision before her committee which can vote to block it.
Opposition Conservative councillor Randal Brew pointed out the Northfield BID, of which he is a member, has a total annual budget of about £100,000.
He warned: "Should we have to pay the £20,000 cost of collecting the levy, that would shoot a huge hole in the accounts."