The biggest council rate rise since caps were introduced would be a "bitter pill to swallow" for residents, but one south-west mayor says the 3.5 per cent increase should be higher.
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The Victorian government announced the cap for the 2023/24 financial year this week, setting it 0.5 per cent below the 4 per cent figure recommended by the Essential Services Commission.
While it's a big jump from this year's 1.75 per cent cap and a full percentage point higher than any increase since the Fair Go Rate capping system was brought in, Moyne Shire mayor Karen Foster said the new cap should have been higher.
"It's disappointing that the government has decided not to accept the ESC recommendation of a more realistic 4 per cent rate cap given the huge financial pressures local government is under," Cr Foster said.
"The current year rate cap is set at 1.75 per cent and the RBA tells us we're looking at a 6.25 per cent CPI increase. There is a compounding effect at play here and we're consistently being asked to do more with less."
Warrnambool Ratepayers Association president Joan Kelson said residents were being asked to stretch their budgets, struggling with interest rate rises and cost of living pressures.
"It's not going to be easy. People are doing it tough now with interest rate rises and then 3.5 per cent on top of that with their rates... is going to be a very bitter pill to swallow," she said.
Mrs Kelson said during the COVID-19 pandemic, there were councils that didn't have rate increases. She said she believed council finances were sturdy enough that it didn't have to pass on the full rate rise.
"But I'm sure they're going to accept whatever they can get. It would be great to think they would just put through two per cent but to be honest I really can't see that happening," she said.
Warrnambool mayor Debbie Arnott said budget discussions had started and while acknowledging the council's expenses had gone up she wouldn't recommend the cap be any higher.
"We understand that the community is hurting," she said. "We'll be working diligently on the budget."
Cr Ben Blain, who has called for a rates freeze the past two years, said he didn't believe the council needed to pass on the entire amount.
"Even though the state government has set the cap at 3.5 per cent, I wouldn't want to see council taking the whole lot this year," he said.
Corangamite Shire mayor Ruth Gstrein said the council was mindful of the burden ratepayers were carrying, but said the increase had been capped "well below the inflation rate, and councils are really struggling to maintain services".
"Those household costs hitting residents all come on councils too, things like fuel, bitumen, they're all having an effect," Cr Gstrein said.
The council has already had to curtail its road sealing program because of soaring bitumen costs, and Cr Gstrein said while it would be nice to keep rates rises at zero, it "wouldn't be sustainable for councils".
"We're lucky at Corangamite that we've had stable finances - we have no debt - but we don't want to go into debt to fund operational issues," she said.
Cr Foster said Moyne Shire was also fortunate to be in a strong financial position, and while the council would have preferred a 4 per cent cap, it wouldn't be applying for a rate cap variation to go beyond the 3.5 per cent limit.
"We're also human beings who pay rates and taxes like everyone else," she said.
