Greater Bendigo deputy mayor Rod Fyffe predicted small and medium-sized councils would be facing significant difficulties as they contended with the effects of a fifth year of capped rates.

"Certainly it's starting to bite now," he said.

Cr Fyffe's comments come after delegates from 70 of the state's 79 councils attended the Municipal Association of Victoria's October state council.

As the delegate for Greater Bendigo, Cr Fyffe said financial sustainability was a key concern underlying a number of the more than 55 motions considered.

The city submitted a motion calling on the state government to provide urgent funding to cover the transitional costs councils statewide were incurring as they took over management of local pounds and animal shelter services from the RSPCA.

Additional costs in Greater Bendigo alone were estimated at $660,000 a year.

Cr Fyffe said more than 90 per cent of delegates supported the city's motion.

"I was very pleased with the support," he said.

DOCUMENT: MAV October 2019 state council motions

He said councils were also worried that state and federal governments were making increasingly short-term funding commitments for programs.

"It is a trend that's developing and it is quite worrying for us," Cr Fyffe said.

He said councils needed to have surety of funding so they could make appropriate provisions for their contributions, put programs into place and promote them.

"We can't be left holding the baby because of rate capping," Cr Fyffe said.

He said councils had wanted to see an investigation of other ways they could generate income in a rate capping environment as part of the local government rating system review.

But Cr Fyffe said the review's terms of reference seemed to a number of councils to be too narrow.

The Mildura City Council suggested the MAV lobby the state government to consider broadening the review's scope to consider the fairness of using Capital Improved Value to determine rates.

It also highlighted an inequity between rural councils and more financially viable metropolitan counterparts, calling for the criteria for the Financial Grants Scheme to be reassessed.

"Rural Councils can not only find themselves with limited rate bases, but often experience higher operational costs in delivering their services across their regions," Mildura City Council submitted.

"With a CIV-based rating system likely to continue within the new Local Government Act, and without changes to the Financial Assistance Grants Scheme, rural councils in their efforts to maintain the same level of services to their metropolitan counterparts will be obliged to charge their ratepayers an iniquitously higher rate in the dollar for the same (CIV) valued property."

Rate capping came into effect in Victoria on July 1, 2016.

Cr Fyffe said councils like Greater Bendigo had been able to make do in recent years, but rising costs meant local governments were feeling the effects.

The rate cap is outside the scope of the rating review's terms of reference, as are state and federal grants and other sources of local government funding.

Waste and resource recovery was another of the key themes evident in the motions before the MAV State Council this month.

A consolidated motion called on the state government to invest the sustainability fund in statewide recycling initiatives and new technologies to help address the recycling crisis.

The MAV also sought for councils to receive compensation for increased kerbside recycling and waste management costs in the wake of SKM Recycling's collapse.

The peak body for local government wanted to see landfill levy funding to Waste and Resource Recovery Groups increased and Sustainability Fund money allocated to councils to help undertake community waste reduction programs and projects.

In a separate motion, the MAV called on both the state and federal governments to establish a climate emergency taskforce.

Social and public housing was expected to be another topic about which the MAV would advocate.

A consolidated motion committed to working with the sector to lobby the state government to build 3000 new social and public housing units a year for 10 years to meet the demand identified by the Victorian Homelessness Council.

It recommended the state government prioritise boosting funding for dedicated crisis housing stock.

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