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GONE are the days when councils could fund big projects in one go, Bendigo's mayor Margaret O'Rourke says.
Rate capping has forced them to rely more heavily on money from state and federal governments, she says.
The City of Greater Bendigo is prepared for an incoming two per cent rate cap - the tightest in three years.
Even so, Cr O'Rourke says four years of rate rises are having an impact on spending and she is not surprised that other councils are saying they may need to start cutting services in years to come.
"To give you an example, based on last year's budget, a two per cent rate cap is about $600,000 less that we will have," she siad.
"When you start to see numbers like that, year on year, you can understand we have to manage our business according to what we can do. So I can see where other councils are coming from."
Bendigo's next budget will be handed down in mid-2020 but the council started planning for it last August, Cr O'Rourke said.
It had been clear for some time that the two per cent cut - based on consumer price index forecasts - was likely, she said.
The council has not had to cut services and does not intend to, instead using "strong" relationships with the Victorian and Australian governments, Cr O'Rourke said.
First and foremost, though, it is looking for efficiencies in its own operations and shaping a 10-year plan, she said.
It is unclear how long councils the size of Bendigo's can keep relying on grants and internal savings before they are forced to cut services.
"I can't give you an indication on that. We will always try to work within the means we have to but there will come a time when that will change," Cr O'Rourke said.
"We are a growing community, so that's where it's much harder for us than most of our surrounding shires.
"We are growing at about two per cent a year with a rate cut. People are expecting provision of services. With a larger population that is obviously quite difficult to manage."
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Further north in the Campaspe Shire, Mayor Adrian Weston said that council would likely not have to seek an exemption from the rate cap or compromise services, at least in the next four years.
"You'll notice I say 'all things being equal' when I talk about this, because there may at some point be some unforeseen event like the economy taking a turn, or something else of that nature," he said.
"But for the moment we are comparatively comfortable finding efficiencies in our operations."
Campaspe has an overarching principal when planning budgets to make sure it does not need to seek a change in rate caps, Cr Weston said.
2pm
MOUNT Alexander Shire councillors are working on a 10-year plan to combat the risks rate capping bring as they grapples with rising costs.
Mayor Christine Henderson says the council has seen a 3.5 per cent rise in costs for services and its workforce but its capacity to raise rates is constrained by the state government.
"Capping has got its advantages for ratepayers, in that they are not going to suffer the three or 3.5 per cent rises to cover services," she said.
The council has no plans to to avoid being constrained by the latest two per cent rate cap, which will take effect at the start of the next financial year, Cr Henderson said.
Even if it did want to go down that road, there would be no guarantee that the lengthy and costly process of making their case to the government would be successful, she said.
"With all the money we would have to spend, it could still be knocked back, so it's a big risk we would have to weigh up," Cr Henderson said.
She noted the state government had been able to lift taxes in last May's budget - something the state government defended at the time because it targeted people they said could bear a greater burden.
The challenges councils have under rate capping will have a very real impact down the line, she said.
"We will have to start cutting services, eventually," she said.
In some ways, the shire is lucky to have suffered financial problems in the 2000s, when councillors hatched a plan for a series of steep rate rises that tailed off in later years, Cr Henderson said.
"Otherwise we could have been in a situation where buildings and roads are falling apart, pools would be in disrepair and roads would be in bad shape," she said.
"Go up to New South Wales, where rate capping has been in place for quite a longer period, and the impact on roads is often plain to see."
Mount Alexander Shire's 10-year plan is expected to be finalised mid-year, and will act as a guide for future council budget decisions.
11.30am
A COUNCIL caught between struggling ratepayers and the need for more services is "not even contemplating" asking for relief from a tightening cap on the money it raises.
Maryborough's Central Goldfields Shire is one of three regional councils, along with the City of Greater Bendigo, to so far confirm they will not seek an exemption to the most stringent rate cap in three years.
The new two per cent cap is a drop from 2.5 per cent and will take affect next financial year, the state government announced this morning.
It will exacerbate challenges for Central Goldfields, where the "one size fits all" rates cap stops services beginning or expanding, chief administrator Noel Harvey said.
"It's challenging for us because we are under-resourced," he said.
Despite that, the council will not look for an exemption.
"That's the dilemma we are caught in. We are extremely mindful of the struggle many in our community are going through," Mr Harvey said.
"We are not a wealthy municipality and many of our ratepayers struggle. So we are not even contemplating going about getting an exemption."
Rate caps were brought in four years ago and have hovered between two and 2.5 per cent ever since.
Before that, the average rate rise was six per cent a year.
Minister for local government Adem Somyurek said the previous decade was one of "unfair, unsustainable increases that hit hard-working Victorian families".
He said that statewide the cap had slowed rate growth and that spending on capital and services had increased.
Mr Harvey said he understood the government's perspective.
So did Loddon Shire mayor Cheryl McKinnon, though she warned that council's expenses are not capped and shrinking rate revenues are a "continual challenge".
"They get tighter but we will certainly continue to service ratepayers at the highest level because that is what they deserve," she said.
The shire has done a review of its services since rate capping began to maximise the value of its services.
Yet Loddon is a rural shire and cannot pass its services on to other groups in the way those with bigger population bases can, Cr McKinnon said.
She said the latest rate cap announcement was fair and reasonable and that the council only relied on rates for one third of its spending.
The rest comes from a series of government grants, some of which are recurrent and some of which are not.
Comment has been sought from the City of Greater Bendigo, the Mount Alexander Shire and the Campaspe Shire.