GREATER Taree City Council's (GTCC) capacity to provide services could be impeded after the Federal government's recent proposal to pause indexation on Financial Assistance Grants.
GTCC is one of many councils nationwide who could face some tough decisions on the funding allocation of future services.
GTCC mayor Paul Hogan said the Federal Government's proposal would have an impact on an already limited budget.
"It is no secret that there is a significant gap between our income and our expenditure and the impact of the recent federal government decision to pause Financial Assistance Grants indexation will leave a significant hole in our annual budget in the future," he said.
"For many years GTCC has sought to shave costs in various ways, but the reality is the profile of our services are now funded to the bare bones, there is no flesh in the budgets.
"Any further reductions in expenditure will need to change the actual profile of the services provided. The cost of providing services is going up in real dollar terms."
Over the next five months, council staff plan to investigate opportunities for different service models for some frontline services to determine a sustainable level of service that is affordable.
This will include investigating the potential for increased income including a Special Rate Variation (SRV) that focuses on infrastructure in preparation for a community consultation next year, which Cr Hogan said would address any community concerns.
"We understand that sections of the community have specific expectations that some services are provided in a particular way and we would like to have a conversation with the whole community about those competing expectations, how we can best manage them and most importantly how services that meet the needs of our community can be afforded" he said.
GTCC acting general manager Ron Posselt said the community consultations would be vital in determining what financial decisions needed to be made.
"There is no doubt these will be challenging conversations, but they must be had because we are in a difficult financial position and council has some complex decisions ahead," he said.
"We strongly believe that the services provided by council and the cost of these services needs to be determined in consultation with the community and we will progress with the groundwork that prepares for that conversation."
Following the community consolation, the council will be required to make decisions about income and service levels that will be documented in a financial sustainability strategy that clearly articulates how it makes decisions that seek to redress the variance between income and expenditure.