But decision not to pursue the planned extra hike has put a $800,000 hole in the city's finances.

The city council had won special permission from the Essential Services Commission to add a two per cent rate rise on top of any state government-imposed cap for two years to help clear the backlog of asset renewal projects, a move that sparked major backlash at the time.

So despite this year's 1.75 per cent rate rise and even bigger jump in waste charges, ratepayers are paying on average $88 less in rates than they would have if the extra cap had been applied this year.

When the pandemic hit in 2020, the council opted not to hit ratepayers with the extra charge that year but forward planning documents had pencilled it in for the 2022-23 financial year.

Pre-pandemic calculations predicted the average rate bill in Warrnambool for 2022-23 would be $2228 but instead it has been kept lower at an average of $2140.

But sparing ratepayers the extra charge comes at a cost to the city's finances.

The council's chief executive officer Peter Schneider said that by not imposing the extra rate rise above the cap, it meant the council missed out on $800,000 in revenue.

Mayor Vicki Jellie said it had been a hard couple of years for the community, and the council was still under pressure too.

She said there were things they wouldn't be able to achieve because the council didn't have the funds.

But Mr Schneider said increasing the rates above the cap in future years was not on the agenda at this stage.

Any move to reintroduce an extra rate hike would have to get the OK from the Essential Services Commission, he said.

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