Councillors Max Taylor, Angie Paspaliaris, Otha Akoch and Richard Ziegeler on Monday night voted to approve the budget but Ben Blain voted against.

Mayor Vicki Jellie and Cr Debbie Arnott were absent from the meeting.

Rates will increase by 1.75 per cent. Cr Blain said the overarching aim of the budget was to provide resources to deliver the council's plan.

"One of the key messages in this budget is to maintain service levels," he said.

He said council was going to halve its contribution to aged care services and keep funding levels the same for children's services.

"We've all seen and felt the inflationary pressures in our own households, these services having stagnated or decreasing council contributions, in my opinion, show a true decrease to these services," Cr Blain said.

"I believe these services, especially aged care, affect some of the most vulnerable in our community. Many of those people are homeowners who have paid rates for a long time. I believe we are doing a disservice to these individuals by effectively providing less service. They are some of the most important services offered by council."

Councillors all acknowledged rising living costs in their budget responses.

Cr Paspaliaris said there had been "cost rises pretty much everywhere for everything".

"Council is not immune to these sorts of things," she said.

"The increase within the rate cap is acceptable at this point. I do think the council's hardship policy has been improved this year where a rebate of $200 will be made to ratepayers who qualify under hardship provisions."

Cr Taylor said the past two years had been extremely difficult due to COVID-19.

"It is causing hardship to a lot of people," he said.

"Inflation is becoming a problem again within Australia and prices of many materials are sky-rocketing. I believe the increase for the budget for 22/23 set at 1.75 per cent is reasonable enough."

Cr Ziegeler said there had been "incredible increasing costs throughout the Australian economy".

"Everything is costing more," he said.

"Our officers have done well to keep the budget within those bounds. I appreciate the efforts and contributions from those in the community who bothered to make comment and submissions to the budget."

The budget adoption also means owners of short-stay holiday rentals will have to register their properties and pay a $400 fee under a new policy.

A specific law will still have to be developed to cover the new fee which the council has flagged would give the public more opportunity to have a say.

"As part of any local law change it would be subject to community consultation," the council said in response to public submissions on the budget.

A $400,000 upgrade to Warrnambool's animal pound and $600,000 for a new hockey pitch are among the big ticket items in the city's $30 million capital works budget which includes carry-over work and new works.

About $3.1 million will be spent on road renewal, a drop from last year's allocation of $3.75 million.

The budget for footpath and bike path renewal will be $1.395 million, down from $1.5 million last year.

The capital works budget also includes $385,000 for upgrading public toilets, $330,000 for playground upgrades and $400,000 for the Japan Street catchment diversion project.

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