PARIS—Negotiations over next year's European Union budget have collapsed after a dispute between member states and the European Commission over a shortfall in the 2012 budget. The talks, which essentially ended before they began, could be a sign of trouble ahead for longer-term EU budget issues.

At issue was a (EURO)8.9 billion ($11.3 billion) shortfall for 2012, according to the European Commission, which asked the states to cover the sum. Several states imposing spending cuts at home questioned the amount.

In a statement on his website, the European Parliament lead negotiator Alain Lamassoure said the commission must submit a new proposal before talks, which face a Tuesday deadline, could continue.

The only agreement Friday was for (EURO)670 million in aid to Italian earthquake victims—but not how to fund it.