Bus use has been falling across the UK since 2008 but the drop has been sharpest in Wales.
The Welsh government puts Â£25m a year into supporting bus services - a quarter less than in 2013.
The Welsh Local Government Association (WLGA) said the level of cuts could be "devastating".
"If the cuts are of the scale of what's been mentioned by George Osborne - we're talking 25 to 40%," the WLGA's transport spokesman Andrew Morgan said.
"You take 40% of funding away from non-protected services like bus services then we're talking about probably another three, four, five per cent of all bus services in Wales will end up being withdrawn."
Kevyn Jones, managing director of Cardiff-based bus operator New Adventure Travel, said about half the routes he ran received some subsidy, but he expected the numbers to reduce in the future.
"The subsidised services are dwindling each year. There's less this year than there was last year and the same each year for the last five years we've been operating them," he added.
A Welsh government spokesperson said: "These grants are intended to supplement local authorities' expenditure on bus services and it is a matter for them how that funding is allocated.
"Under the concessionary bus travel scheme local authorities are responsible for determining the reimbursement rate for bus operators and for ensuring that operators are no better and no worse off."
Hear more on Eye on Wales, BBC Radio Wales, Sunday 18 October at 12:30 BST.

Mr Besigye, under house arrest since Friday, said Ugandans had seen "the most fraudulent electoral process".
He described the poll as a sham and a creeping military coup.
President Museveni, in power for 30 years, received nearly 61% of the votes, with Mr Besigye taking 35%.
Foreign observers say the poll was conducted in an atmosphere of fear and intimidation.
While praising the "remarkable determination" of Ugandans to vote, EU chief observer Eduard Kukan said the governing National Resistance Movement's "domination of the political landscape distorted the fairness of the campaign".
The election has been marred by sporadic violence and opposition allegations of electoral fraud, with social media sites and messaging apps blocked.
"Today I am under house arrest," Mr Besigye said in a statement.
"My home is sealed off and I am not allowed to leave. Nobody is allowed to access my home. I am also under some kind of electronic blockade. I am unable to access any form of internet service in my house.
"Generally, the regime is baring its bloodied fangs and claws for all to see. This has not been an electoral process. This is a creeping military coup."
It was the fourth time Mr Besigye, candidate for the opposition Forum for Democratic Change, had taken on President Museveni.
The two men were once allies, with Mr Besigye serving as Mr Museveni's personal doctor when they were guerrilla fighters.
He was placed under house arrest ostensibly to stop him announcing his vote score unilaterally.
Mr Museveni seized power in 1986 and is credited with restoring stability to Uganda. However, critics say he has become increasingly authoritarian.
The next closest challenger to Mr Museveni, former Prime Minister Amama Mbabazi, is also reportedly under house arrest.
The National Resistance Movement put out a statement celebrating the win, saying Mr Museveni's opponents had "failed to offer any alternative".
Uganda's old guard tries new election tactics
Bus services in Wales could be dramatically cut as a result of the UK government's spending review next month, it has been warned.
[NEXT_CONCEPT]
The main opposition leader in Uganda, Kizza Besigye, has rejected the result of Thursday's elections, in which President Yoweri Museveni won a fifth term of office.