Cr Taylor also questioned whether the City of Ballarat should carry on delivering all the services it currently provides.

The two per cent cap - which will apply to rates for the 2020/21 financial year - was announced by the state's local government minister Adem Somyurek last week.

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The state's "Fair Go Rates" system was introduced in the 2016/17 financial year and was designed to stop "unfair rates hikes", Mr Somyurek said.

The latest rate cap compares with at 2.5 per cent in 2016-17, 2 per cent in 2017-18, 2.25 per cent in 2018-19 and 2.5 per cent in 2019-20.

The average rate increase has declined steeply since the cap was introduced.

SEE HOW BALLARAT RATE INCREASES HAVE FALLEN SINCE THE RATE CAP

According to the Local Government Victoria website, rates increased by an annual average of 6.37 per cent in Ballarat in the decade running up to 2015/16.

There was an increase of 5.5 per cent in 2015/16 and 6.5 per cent in 2014/15. Back in 2015, the then CEO Anthony Schinck said that services would need to be cut if rates went below an annual increase of 5.5 per cent.

While rate increases are now substantially lower overall, many Ballarat residents have still faced a sharp spike in their bills in recent years. With rates tied to property prices, houses in areas with fast-growing property values have seen rates rise considerably.

SEE HOW BALLARAT, BENDIGO AND GEELONG COMPARE

On Monday, the City of Ballarat CEO Justine Linley told The Courier long-term budgets had been predicated on an average rates cap of two per cent.

Ms Linley said that while council was "not particularly enamoured" with the current rate cap system, they would not be seeking a review of the level this year. She also said officers would look into the implications of increasing rates at a level lower than the two per cent cap.

The City of Ballarat had been advocating reform of council funding for some time, she said, including more contributions from organisations currently exempted from rates.

These include profit-making hospitals and schools. "We don't think it is particularly fair for mum and dad ratepayers to pick up the tab," Ms Linley said.

The CEO also said the rate cap presented further obstacles to meet union demands for higher pay rises. Council management and unions are currently negotiating a new staff enterprise bargaining agreement.

Meanwhile, a report into the way the rates system works is due at the end of March next year following a state-wide review.

Cr Taylor was critical of the state government's approach to rate-capping and said he would prefer rate limits set over a four-year period.

"If we can have a longer-term budget, it makes it so much easier to manage," he said. "We need certainty around budgeting. They need to set an amount and lock it in."

He questioned whether everything currently provided the City of Ballarat, including immunisation and school crossing supervisors, should still be funded by local government - although said change would be a slow process.

All the different budget options should be weighed up, he said, ranging from a rates freeze to using the full extent of the cap.

At a special council meeting earlier this year to confirm the 2019/20 budget, Cr Amy Johnson proposed freezing rates.

Other councillors described her intervention as "last-minute" and "an ambush", and said discussions should have been conducted in a structured way during the budget setting process.

Council is due to start drafting the budget for the next financial year early in 2020.

Do you think rates should be frozen or council services reviewed? Let us know