The State Government sent out notification to all Victorian councils last week informing them that the plan to cap rate rises will begin with their 2016/17 budgets.

Mount Alexander Shire mayor Christine Henderson attended a conference with 22 other new mayors last week, where rate capping proved to be a hot topic.

She said 60 per cent of the council's revenue came through rates.

"The bottom line is that the CPI measures how households usually spend their money. Councils shop very differently to households," Cr Henderson said.

"We spend much more on construction, fuel, equipment."

Mount Alexander Shire has a long-term goal to reduce rate rises to 4.8 per cent. The last budget had a rise of 6.5 per cent.

Cr Henderson said having the flexibility to raise rates independently meant they could budget more comfortably for works and services.

"We have an awful lot of public buildings over 150 years of age," she said.

"The Kennett government brought in rate capping in the mid-90s. The result was a huge asset renewal gap."

Labor made the promise to cap rates at CPI during the recent state election campaign.

Campaspe Shire mayor Leigh Wilson said it was an unimaginative way to make councils review their budgets.

"If they think it's such a great idea, they should canvass New South Wales councils, where rate capping has been in for years," he said.

"They have far less they can do for their communities."

The Victorian Auditor General identified a $300 million backlog of asset renewal in councils across Victoria. Cr Wilson said this could blow out to $2.5 billion by 2027.

He said Campaspe would likely need to replace its seven outdoor pools in the coming decades, costing $4.5 million each.

"In the next half a century there is going to be a huge increase in the maintenance and replacement of assets," he said.

"We saved half a million dollars from operating costs in our last budget, something we received very little recognition for.

"We're working very hard at looking internally for savings."

The move did receive support from City of Greater Bendigo mayor Peter Cox.

He said while it presented a challenge, it was important for larger councils to find other ways to balance their budgets.

"It's a good thing for local government, it makes us look at innovative ways to deliver services and major projects," Cr Cox said.

"It's not meant to target small councils, but larger metropolitan councils."

Despite the endorsement, he said smaller rural councils could struggle with the change.