The Victorian Local Governance Association says councils will lose up to $150 million when the State Government caps rate rises.

The peak municipal body says the rate caps put vital services and jobs at risk.

Speaking to News Corp reporters this week, Victorian councils said they expected to lose up to $3 million each in the next year in reduced revenue, due to the rates being capped at the level of inflation.

The VLGA says regional and rural councils will not be hit as hard, but still lose $200,000 to $250,000 each next year.

VLGA CEO Andrew Hollows said council-run services like libraries, meals on wheels, child care and maternal health centres could be at risk.

“In the first instance they would be substantially reduced, then risk being cut completely,” Dr Hollows said.

“This would have a devastating flow-on to those local economies that are already doing it tough.”

Victorian Local Governance Association president Sebastian Klein agreed that councils will be worse off

“As shown by NSW’s experience, a loss of millions per council will undoubtedly affect services, infrastructure and jobs, and will pose a serious challenge to Victorian local governments and the communities they serve,” Cr Klein said.

A spokesperson for Local Government Minister Natalie Hutchins told reporters that rate capping was not about cutting jobs, but cutting waste.

“If a council can successfully demonstrate they have their community’s support and they are raising and spending ratepayers money responsibly, then they will be allowed to exceed the cap,” the spokesperson said.