The regional representatives have been summoned for police questioning, the prosecutor's office said in a statement on Wednesday.
Investigators found councillors from former premier Silvio Berlusconi's People of Freedom party spent €11,000 in 2011 on bar expenses, while the centre-left Democratic Party had given €14,500 to three local TV channels.
There have been several recent investigations against local and national officials over the misuse of electoral subsidies given by the state to parties annually to fund political campaigns.
Instead the investigation in Naples, capital of Campania, found that the councillors had been spending the money on everything ranging from glasses to cosmetics, from children's toys to DVDs.
The expenses totalled €1.7 million over a two-year period and one of the biggest recipients was Italy of Values, a party set up by a crusading ex-prosecutor to fight against corruption.
Investigators said that 95 percent of the expenses by the party were "irregular and suspicious".
The new anti-establishment Five Star Movement party, which has refused to accept any state subsidies, called for the assembly to resign and for new regional elections to be held.