Debate has been sparked over a process unique to NSW councils; the rate-peg.

The state’s Independent Pricing and Regulatory Tribunal has released the rate-peg for next financial year, capping rises in 2015/16 at 2.4 per cent.

The peg requires any council that wishes to go above the limit to apply to do so by next Friday.

But Chief Executive of the Riverina Eastern Regional Organisation of Councils, Julie Briggs says many councils will have to apply, as 2.4 per cent will barely cover award wage increases over that period.

“I mean it's better than nothing, but I think councils should be allowed to determine their rates in consultation with their communities and not as part of a political process that comes out of the state government,” she told the ABC.

Recent cuts in federal funding to councils have caused a stir of disappointment over the rate pegging limit.

Acting Director of Corporate Services at Wagga Wagga City Council, Michael Schmid, has told reporters that the cap is less than the 2.5 per cent council had budgeted.

The difference will shave $38,000 from projected income, which will be on top of federal funding cuts costing millions across councils.

Mr Schmid said the State Government’s decision failed to account for the freeze on indexation of Financial Assistance Grants.

Councils are preparing to see a number of changes in upcoming ‘Fit for the Future’ reforms, but it appears unlikely that an end to rate pegging will be among them.

Some Fit for the Future proposals do include easier special rate variations, and Mr Schmid said such a rise could be on the way for the Wagga Wagga City Council area, but not in 2015/16.

Wagga Wagga has already started cutting a planned 20 jobs over three years, following a freeze on staff costs.