The Shire's 2018-2019 financial report shows a $1,278,000 depreciation on roads across the region.

Mayor Neil Trotter said that while council manage 914 kilometres of sealed roads, most of the region's arterial roads were not council-managed.

"Most of the major arterial roads are managed by Regional Roads Victoria," he said.

"There's about a 20 year lifespan on roads, they depreciate over time and we have to account for that.

"Each year we put more money into our roads, our ratepayers tell us that needs to be done."

A new road sealing contract between Corangamite Shire Council and Warrnambool City Council will be one of the items discussed at Tuesday night's council meeting in Terang.

The more than $2.3 million contract will be a collaborative tender between the two municipalities and is expected to be awarded to contractor Inroads.

Based on the tender price from Inroads, the cost to complete the Corangamite Shire component of the 2019-2020 sealing contract is $1,831,459, meaning $78,541 will be leftover from the roads budget.

Councillors will decide one of three options on Tuesday night: whether the leftover cash will be used to seal more roads, put into other road maintenance activities or pocketed into the general revenue and boost the organisation's financial position.

"I don't want to preempt the council decision, but I think it pays to be financially prudent," Cr Trotter said.

The Shire racked up a $7.21 million surplus in the financial year ending June 30, higher than the adopted budget surplus of $2.56 million.

It also made $862,000 more on rates and charges - $21.6 million - compared to the same time last year.

Cr Trotter said a number of factors contributed to the multi-million dollar revenue, including more planning permit lodged and grants.

"Some of it is timing issues in terms of when grants are allocated and used," he said.

"We also got additional money from planning fees, we had a lot more planning applications than anticipated which is great to see that there's higher activity in the area.

"We overestimated on the rates and charges, as well as some aspects of landfill."

The Corangamite Shire Meeting will be held Tuesday night at 7pm, The Rose Room, Terang Civic Centre, High Street, Terang.

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