Names have been drawn for what could be the most keenly-watched local government election ever.

Corruption and financial corpulence have set the scene for a fiery contest in the election of the Lord Mayor of Newcastle.

The Newcastle by-election was prompted by the resignation of former Lord Mayor Jeff McCloy, who admitted to a corruption inquiry that he had handed out large sums of cash from banned political donors, allegedly funnelled through the Federal LNP, to fund the election campaigns of several NSW Liberal MPs.

The ballot draw for next month’s by-election was on this week, with independent candidate Aaron Buman taking top spot and Greens councillor Therese Doyle on the bottom of the list, but it seems a verbal scuffle has already started among those in the middle.

Councillor Brad Luke has held the position of acting lord mayor since the resignation of Jeff McCloy, but has now stood aside from his other position as the Liberal Party's Newcastle branch president to run as an indepdent.

But leaving his deep links with the Liberals and running as an independent is an attempt to distance himself from corrupt colleagues and hood-wink the voters, one of Cr Luke’s Labor Party competitors says.

But Labor Councillor Nuatali Nelmes says everyone knows Cr Luke’s Liberal leanings.

"He's a member of the Liberal party, he is an elected Liberal councillor for the last six years and he's running as an independent," she said.

“The Liberal party should have endorsed him to run as a Liberal candidate.”

Councillor Luke spoke in response from a council trip to the US, rejecting the claim.

“I've always have acted independently when I've been in the chair anyway as the acting lord mayor.

“I've been well known in Newcastle so there's nothing that would hide what my policy beliefs are and they would not change one bit.

“I believe though that the lord mayor should stand as an independent,” he said.

Meanwhile the candidate with the top ballot spot, Mr Buman, has criticised the timing of this week’s ballot draw, in an interview for the ABC.

“Two o'clock is not a good time for a ballot draw, I've got businesses to run,” he said.

Former Newcastle Lord Mayor Jeff McCloy re-inflamed some critics this week, after it was revealed his birthday cake this year had been made into the shape of a brown paper bag spilling hundred dollar notes.

Some suggested it was an inappropriate and flagrant allusion to his corrupt practices in office.