New South Wales Councils say the State Government must stop fiddling while they burn.

A summit this week has been told councils across NSW are being asked to carry the costs of public transport and school construction, while simultaneously being told they are poor financial managers who should be sacked.

The Local Government NSW Finance Summit today heard State Transit demanded $100,000 from Lane Cove Council to run public bus services through a newly rezoned residential area planned for 3,000 additional residents.

Meanwhile the Department of Education had suggested the Council should impose a “betterment tax” on residents to pay for a new school in the same new area.

“They [the Baird Government] claim to want strong councils and strong communities but refuse to address the systemic issues that have led us to where we are today,” Local Government NSW president Keith Rhoades says.

“Councils have already come a long way in getting their financial houses in order, but while some of the answers are in our hands, other spheres of Government also need to get serious about what they can do to improve Local Government financial sustainability.

“Fix the funding first, then let communities decide whether they need amalgamations.”

Some 44 Councils gathered at the Summit to examine how best to achieve financial sustainability, which the sector argues is the critical element of meaningful reform.

One regional Council told the Summit it was required to pay commercial rental rates for crown land used by the Rural Fire Service - and on one occasion was asked to pay the State Government a $900 fee to check Crown land for contamination before an RFS building could be built.

“We’re not putting out the begging bowl – we’re calling on the Government to get real and stop asking Councils to do more and more with less,” Cr Rhoades said.

“The sector understands that the State Government doesn’t want to risk its political capital by putting an end to rate-pegging, but the reality is that rates have not kept pace with the cost of services that Local Government is expected to deliver.

“Combine rate-pegging with cost-shifting and it’s no surprise many councils have been forced into deficit, or to run an infrastructure maintenance backlog.

“Yet that’s the basis of the flawed $1-million-per-day claim the Government is using to justify its forced amalgamations.

“Talk about an irrational argument.

“You don’t have to be a rocket scientist to see that combining three struggling councils into one just leaves you with one big struggling council.

“And it’s not even a zero sum game, because forced amalgamations are going to cost significantly more than the Government is offering as an incentive.

“The mythical $1 billion support package is just that – a myth – given that more than $600 million is simply access to cheaper loans. It's ratepayers' money we're talking about, not the Government's.

“Loans still need to be paid back … and so round and round we go.”