The council, while lifting rates by the state government limit of 2 per cent next financial year, is forecasting to exceed the cap with 3 per cent rises in its following two budgets.

The city hopes to raise an extra $3.98 million in the 2018-19 and 2019-20 financial years, the equivalent of about 10 per cent more income than 2017-18.

The move to lift rates above inflation was vital for “financial sustainability”, acting chief executive officer Andrew Paton said.

“Without a change to current rate capping arrangements council may have to reduce the services it provides to the community,” he said in a statement.

“The proposed increase is in order for council to maintain financial sustainability and to close the gap between the cost of renewing infrastructure – such as bridges and paths – and funding currently available for their maintenance and renewal.”

Councils looking to lift rates beyond the cap must apply for an exemption, explain their reasons and ratepayers’ views.

Mr Paton said the increases would require “broad community support”.

The city is seeking views on the draft budget, its four-year plan and a longer term vision, W2040.

“Feedback through these planning processes will help inform council as to whether there is support for a rate increase above the CPI,” Mr Paton said.