Some councils had "a clearly defined date that they will technically be insolvent, having used debt to quite rightly hold off the ensuing financial and political cataclysm", Clutha District Mayor Bryan Cadogan said.
The health and wellbeing of communities was threatened while there was "continued abdication of responsibility from Wellington", he said.
The mayor’s remarks came after the Otago Daily Times sought comment from Minister of Local Government Simeon Brown about big rates rises, council deficits, debt pressure and repeated commentary about the funding model being "broken".
Mr Brown said local government’s job was to provide frontline services that had been their responsibility for decades, such as roads, water services and libraries.
"Like most New Zealanders, central government is having to prioritise the must-haves over the nice-to-haves," he said.
"For the government, this means funding essential services and critical infrastructure.
"I expect local councils to adopt a similar approach, going line by line through their expenditure to ensure they are focused on core business."
Mr Brown said the government had inherited an inflationary environment.
"This is having an impact on local government finances and means councils will need to keep a close eye on expenses."
The government was considering sharing with councils a portion of GST collected on new housing to incentivise growth and it was developing a strategic approach for city and regional deals to support councils with delivering infrastructure, he said.
Mr Cadogan said the Clutha council had just completed its long-term plan for 2024-34 which involved a line-by-line focus on prioritising what core services could be afforded.
"Eighty percent of this year’s increases were on Three Waters alone. We still have the third-longest roading network in New Zealand to maintain and we have 12 distinct communities all requiring services," he said.
"We are so far past only focusing on core needs that it is insulting to once again be told that if we follow this elementary advice the solution will be forthcoming."
He described the possibility of getting a share of GST on new residential builds and city or regional deals as meagre offerings.
Dunedin Mayor Jules Radich said the minister’s expectation was for councils to provide essential services and critical infrastructure, "and that’s exactly what we’re doing".
"We’re taking a responsible approach, while reviewing costs where we can, to continue investing in our city for the benefit of our community," Mr Radich said.
"The result is a 17.5% rates increase for 2024-25, which we all acknowledge is high, but so is the cost of not doing the work we need to," Mr Radich said.
"The problem remains the same — a fundamental disconnect between what councils are being asked to deliver, and the funding tools they have available to pay for that delivery."
City councillor Steve Walker said the system was broken and challenges were particularly acute for the more rural councils with smaller rating bases.
"For Dunedin, frontline services make up much of our recent annual plan and despite some limited pushback from submitters around cutting back on nice-to-haves, they simply don’t exist."
Cr Sophie Barker said water infrastructure and interest rates on borrowing were costly and depreciation was "another killer".
However, failing to build a better city and fix infrastructure would be unacceptable, she said.
Cr Barker said it would be interesting to see what the framework for city and regional deals might be.
"Dunedin needs to get ahead of this and work out what its priority projects are that would require government help and investment."
Cr Andrew Whiley said the revenue model for local government was not working.
He conceded many councils in the past 35 years had failed to spend appropriately on infrastructure and had deferred maintenance.
"It does add up and this becomes a big bill for a later date," Cr Whiley said.
"In regard to Dunedin’s Three Waters infrastructure, this bill is now having to be paid."
The Dunedin City Council had lately put more emphasis on going through finances line by line, he said.
Cr David Benson-Pope said the government appeared to be unconcerned by local government issues.
