The rise, which is the lowest in the south-west, comes as a one-off municipal charge of $60 imposed last year is removed from rate bills.

If that charge is not included in the figures, the general rate increase comes in at 5 per cent, on par with other councils.

The $60 levy was introduced as a quick fix to help meet an unprecedented call on defined benefits superannuation of $2.9 million and a shortfall in government grants in the 2013-14 year.

Chief executive officer Andrew Mason said the budget aimed to balance the demand for services and infrastructure, the community’s capacity to pay, and financial sustainability.

The budget documents to be presented to a special council meeting tonight predict the 2014-2015 operating position will be significantly impacted by wages growth, reductions in government funding and future defined benefit superannuation contributions. 

Rates and charges will account for 46 per cent of the council’s revenue for the 12-month period, raising $18.5 million. The shire also plans to borrow $1.25 million to help fund capital works.

It is budgeting for an operating surplus of $1.34 million.

Mayor Chris O’Connor has previously announced a plan to reduce the farm rate from 95 per cent to 94 per cent of the general rate.

The council justifies this decision, saying farming operations involve large properties which have significant value and which are often operated as family concerns.

“Agricultural producers are unable to pass on increases in costs like other businesses. Farm profitability is affected by the vagaries of weather and international markets. In this sense, farms are seen to be more susceptible or fragile than other commercial and industrial operations.”

All properties in the shire have been revalued as part of a general review, with new values applying for the 2014-2015 year.

Property valuations have dropped by 5 per cent overall as a result, with farm property values dropping by 11 per cent.

Big-ticket items listed in the draft budget include a $5.8 million road improvement and maintenance program, $3.2 million for building and streetscape works, $355,000 for bridges, $287,000 for playgrounds in Camperdown and Terang and $1.5 million in council fleet replacements.

New initiatives planned for the year include $115,000 for community planning projects, $100,000 towards the Simpson Recreation Reserve development, $60,000 for initiatives to attract business, $30,000 for a synthetic green at the Timboon Bowling Club and $10,000 each for the Camperdown Lakes Recreation Reserve master plan and the Cobden sports centre feasibility study.

The council has also earmarked $400,000 for a reserve fund for future defined benefit superannuation calls and $80,000 for a reserve fund for restoration work at the Naroghid landfill.