Orange City Council CEO David Waddell said if approved by the NSW Government, IPART's recommendation had the potential to slash $836,000 off council's 2022/2023 budget after wages growth for its employees of around two per cent was taken into account.

"We are keenly awaiting to see if the government will adopt the point-seven (per cent), or hopefully adopt something more like the two per cent, which is what we budget for," Mr Waddell said.

For the first time, IPART has used population growth as its basis for determining rate pegs for individual councils, ranging from 0.7 per cent to five per cent, the latter the maximum amount by which a council may increase its rates.

Mr Waddell said he expected a number of councils will put in submissions lobbying for a better deal.

"And Orange council will be considering whether we want to put a submission in," he said.

Mr Waddell explained that if the 0.7 per cent rate peg was applied to the current budget, rather than the 2.5 per cent council had forecast, which took into account midrange inflation targets of two to three per cent, Orange would have a shortfall of $625,000 for the 2022-23 financial year.

"This is worrying because the actual employee award increase which was passed through, of two per cent and more, actually increases our employee expenses by $1,079,000.

"Put another way, council will have gone backwards financially by $836,000 after having dealt with the wages costs ... before any increases to materials, contracts or other expenses are even considered.

"Therefore it is a very worrying situation for Orange City Council's budget if the government endorses IPART's recommendation."

He said if adopted, Orange City Council would have to cut services.

Regionally, Blayney, Oberon, Lithgow, Dubbo Regional, and Mid Western (Mudgee, Gulgong and Rylstone) LGAs also have 0.7 per cent pegs. Bathurst Regional Council is 0.9 per cent, as is Cabonne.

Camden is on the top of the scale with its rates pegged at 5 per cent with a population growth of 6.3 per cent. Orange has been given a growth rate of 0.1 per cent while Bathurst's is 0.9 per cent, Cabonne's is 0.3 per cent.

Mr Waddell admitted he did have some reservations about the IPART proposal to base rates pegging on population growth when it was flagged mid last year.

"Anything worries us that takes away potential income," he added.

He also conceded ratepayers would more than likely be happy to see the peg reduced.

"I'm sure ratepayers in these difficult times don't want to see rates getting higher but rates increasing by inflation is not considered unreasonable," he said.

In its final report on the rates pegging, IPART said its methodology would increase the total general income of 96 of the 128 councils in NSW.

It also increased the total general income of the local government sector by 1.5 per cent, that is an additional $287 million.

The report also noted several ways councils could increase their revenue outside the rates peg including, contributions from developers to fund infrastructure necessary to serve the needs of the development, supplementary valuations, ie when the Valuer General issues a supplementary valuation due to changes in land value (e.g. when land is rezoned or subdivided) and special variations, where councils can apply to IPART for a special variation to increase their general income above the rate peg.

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