The Essential Services Commission announced on Tuesday morning it had refused council’s application to raise rates by 3.7 per cent. 

The policy was brought in by the Victorian government in response to community outrage over continually growing council rates. 

This decision means the City of Ballarat will miss out on just over $1 million next financial year. 

The initial plan in last year’s budget was that rates would go up 5.5 per cent next year, following several years of similar rises. 

ESC chairman Dr Ron Ben-David said applications to go above 2.5 per cent to deal with short-term needs were rejected. 

 “We approved applications where the councils could clearly demonstrate a long-term financial need, supported by well-developed long-term plans,” he said. 

“Rate increases last forever, short-term budget needs do not.”

“A rate increase means ratepayers continue to pay higher rates even after the short-term need has been met.” 

Pyrenees Shire Council and Moorabool Shire Council succeeded in their applications

Pyrenees will be able to raise rates 3.8 per cent and Moorabool will raise rates an average of 3.5 per cent. 

But council says the process was flawed and now residents will miss out as maintenance and services are cut. 

Deputy Mayor Belinda Coates said the million dollars they will now go without would come from beneath people’s feet. 

“In the short term it might not be immediately obvious, but it certainly will hurt people over time,” she said. 

“It’s over $1 million that will have to come from somewhere and whether that’s roads and footpaths or gutters or services, all of that will need to be looked at.” 

The ESC was damning of the City of Ballarat in its explanation for the rejection. 

“The Commission does not consider that it is in the long-term interests of ratepayers to fund the one-off cost or funding shortfall identified by Ballarat with a permanent increase to the rate base as this would result in ratepayers continuing to pay higher rates after the short-term need had been addressed,” the report said. 

“The Commission was not satisfied that Ballarat has demonstrated how it had taken into account the views of its ratepayers and the community in forming its application for a higher cap.” 

Cr Coates described the ESC’s comments “unfair” considering the hoops through which council had to jump through. 

“We feel it’s unfair given the short timeframes, the onerous processes that they imposed on councils to apply for a variation, and then changing it part way through as well,” she said. 

City of Ballarat CEO Justine Linley said they also felt deceived as rural and regional councils were encouraged to apply for a rate cap variation. 

“There were numerous forums leading up to the announcement of the structure of how you would go about it, that was targeted specifically at rural and regional councils to say ‘you guys don’t worry...we know that you’re not profligate with your spending, that you do things in a very consultative way with your community, so by all means apply for the rate variation,” she said. 

“We were encouraged to seek variations (by the government and ESC).” 

Council had released four different draft budgets. 

The no-variation draft budget will be on public exhibition until June 13. 

Six councils out of the 10 were granted their variations. 

The ESC said in its statement the successful councils demonstrated the rate rises above 2.5 per cent were necessary for long-term financial plans. 

The Victorian Local Government Association slammed the process, echoing the City of Ballarat. 

“It’s all well and good for these decisions to be made sitting in Spring St but it’s local communities who will feel the impact of the state government's policy, this year and in the years to come,” said VLGA president Sebastian Klein. 

“Councils will now likely have to defer or decline to proceed with planned infrastructure investments.”