Victoria's Legislative Council is investigating council funding arrangements and how they're meeting, or struggling to meet, community needs.
"We're fighting a losing battle with rising cost and constrained revenue," Campaspe Shire deputy mayor Tony Marwood told the inquiry.
A council rate cap of 3.5 per cent, set by the Victorian government, significantly undershot annualised inflation for all of the last three quarters, he said.
"We wonder why state government does not understand how this level of rate capping is crippling local government."
The number of Victorian councils posting a budget deficit has surged from 23 in 2018-19 to 37 in 2022-23, according to Victoria's auditor general.
Campaspe - which includes towns like Echuca and Rochester, rocked by floods in 2022 - was now struggling to rebuild vital infrastructure due to recovery grant loopholes.
"To reinstate that road to today's current safety standards, we need to install guardrails, need to remove some trees," the shire's corporate services director Matthew McPherson said.
"That's deemed as upgrade, that's deemed as betterment, and it's not funded."
As a result the council is only receiving 40 cents on the dollar for $9 million worth of sealed road under Commonwealth-funded, state-delivered disaster recovery funding arrangements, which provide for pre-disaster condition rebuilds.
"It's not sustainable for council," Mr McPherson told the committee.
Last year the Victorian and federal governments announced $9.4 million to fund resilience upgrades for public assets damaged in the floods, with up to $1 million going to Campaspe.
In the smaller shire of Buloke in northwest Victoria, acting chief executive officer Daniel McLoughlan said budgets were stretched
"To replace one kilometre of that 946km sealed network costs $400,000," he said.
"(The) federal assistance grants' road component and the (federal) Roads to Recovery program is our road budget."
Mr McLoughlan said maintenance and renewal costs for existing infrastructure had spiked 10 to 30 per cent over the past three years with no new income opportunities.Â
"Without reform, we can't sustain our network."
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