'Shock' emergency services levy rise may see council services cut, Narromine Shire Council mayor Craig Davies worries

The levy, which funds agencies like the Rural Fire Service and the SES, is mostly paid for as part of insurance premiums. But the state government and councils contribute 14.7 and 11.7 percent respectively.

Hoping to find savings in their budget, the new Labor government has decided to end a controversial subsidy scheme meant to take the burden off local government, leaving the state's 128 councils to foot the bill for an additional $77 million.

Cr Davies said the change will see the Narromine Shire Council paying $196,000 more to the emergency services levy in the 2023 to 2024 financial year.

"Unfortunately, the newly appointed State Government has failed to consult with us about this shock to council's budget," he said.

"Council has only been notified of the sizable increase of this levy after the 2023/2024 budget has been set for the subsequent twelve months, with no consultation or communication to anyone in the local government sector.

"Again, the State Government has devolved a function to local government without consideration of fair remuneration or consultation."

Chairman of the Country Mayors Association Jamie Chaffey said ahead of the election the association called on all political parties to commit to a policy reform that would see the levy being removed from local government and funded by other means, like a property tax.

However their attempts were unsuccessful.

"This recent announcement clarifies why. The shifting of financial responsibilities from state to local government without commensurate compensation, cost-shifting, is nothing new," he said.

"Local government is now also being forced to show the assets of local Rural Fire Services on our books, although they are technically owned by the state government, so the depreciation becomes the responsibility of local government and is therefore further reducing the funds available to provide essential community services."

Mr Chaffey said options for councils to fund the significant rise in costs could include cutting back on services to the community, applying for another rate rise through IPART and passing on costs to ratepayers or selling off council-owned assets.

Councils' peak body Local Government NSW (LGNSW) warned the extra financial burden could be "devastating" for some councils and lead to essential services being cut.

"This is an alarming development coming late in the council budgeting cycle and well after the IPART's rates determination for 2023 to 24," LGNSW President Darriea Turley said.

"The effect will leave some councils with insufficient funds to cover cost increases in other areas. These costs will need to be met by cuts to staff and services."

She said the decision to end the subsidy and pass the cost back to councils without warning was a "cost shifting" exercise by the state government.

"To make things worse, the ESL has seen stratospheric increases year-on-year to make up for the government's unfunded workers compensation liability for emergency services workers struck down by a range of cancers," she said.

"Now it appears councils are being asked to fund massive rises in emergency services budgets, including a 73 percent increase in the budget allocation to the SES.

Ms Turley said local councils understand the need for emergency workers and appreciate the work that they do to keep communities safe, however, the current system of funding them was "unsustainable".

"I'm seeking urgent talks with Treasurer Daniel Mookhey where I will ask him to work with councils to develop a fairer funding system," she said.

"This shock increase comes at a time when council budgets are still struggling with flood and bushfire disaster recovery. When you factor in the inflation and soaring costs we are all facing across the full gamut of our operations, the immediate future looks particularly bleak."

Cr Davies also said the Narromine Council would be following up its concerns with local government minister Ron Hoenig and premier Chris Minns.

"[We want to] encourage a fairer, more transparent and equitable funding formula to the Emergency Services Levy," he said.

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