Moyne Shire Council plans to raise rates by the maximum 3.5 per cent allowed under state rules as it faces rising costs and dwindling revenue.
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The news will come as a blow to ratepayers struggling with cost of living pressures, but in a statement introducing the draft 2023-24 budget, mayor Karen Foster and chief executive officer Brett Davis said inflation had hit the council just as hard.
"This is a responsible budget which delivers on the goals of the council plan, but also reflects the financial and budgetary pressures every household and business is facing," they said.
"Council is not exempt from those challenges, but we remain committed to delivering services for our community in a way that represents best value for ratepayers' dollars."
The rate rise will fall most heavily on rural and rural lifestyle properties, thanks mainly to property values rising by 25 per cent for rural properties in the shire, and 20 per cent for rural lifestyle properties.
Cr Foster said the council was grappling with the "economic headwinds" of inflation, in particular the cost of basic materials like bitumen, which had risen 30 per cent in the past 12 months.
"Fuel for plant and equipment, construction materials and general costs of doing business have all risen significantly," Cr Foster said.
"The community expects us to continue to deliver services and as a council we remain committed to delivering those, but we have to do it in a way that represents best value for money for our ratepayers."
In the budget introduction, she and Mr Davis said the council's costs had soared well beyond 3.5 per cent, meaning its self-generated revenue base was going backwards despite the hike, with rate revenue dipping to 45.7 per cent of total council revenue, its lowest ratio in five years.
"Council will continue to review how it delivers its services and to drive innovation and efficiency gains to sustain its operations considering the financial headwinds it faces," they said.
The council plans to spend $58.6 million in the coming financial year, of which $24.1 million will be capital works projects like road repairs, asset renewal and new building projects.
The capital works spend is down 20 per cent on the current financial year, with council spending down 40 per cent, due mainly to big spending cuts on council-owned property, machinery and equipment.
By contrast, spending on the region's overburdened road network will rise by more than 50 per cent to $14.1 million, with two thirds of that spent on road rehabilitation, which restores deteriorating sections of the road surface.
Other big-ticket projects will be the $1 million electrical refitting of Port Fairy's Gardens Caravan Park and $1.7 million for Port Fairy's play space, skate park and bicycle strategy.
The council's staff costs will grow by about $1.5 million, or six per cent, as the workforce expands by five per cent.
Cr Foster said the council had to plan to "do more with less" in the coming years, particularly as once plentiful government grants became more difficult to get.
This is reflected in the budget, with capital works grants predicted to halve in 2024-25, and then halve again to just a quarter of 2023-24 levels in three years' time.