Armidale Regional Council general manager James Roncon said it was a very disappointing outcome.

"In real terms, what it means for us is that while it's about $135,000 additional rate revenue council will receive, but when you put that against the two and a half per cent wage increase that will go through later in this year, that's going to give us a deficit of about $350,000 straightaway," Mr Roncon said.

"And that's before you build in all the other rising costs of materials and utilities."

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Mr Roncon said the possibility of a spike in fuel prices caused by the Russia and Ukraine conflict was also a concern.

The 2022/23 budget preparations by Mr Roncon and his team have begun, and the planning process with the council starts in late March.

"There are only really a couple of ways it can go," he said.

"You've either got to raise your revenue base through fees and charges, or you've got to start cutting services back and the types of services you provide. Otherwise, you've got to think of cutting staff back, and that's not really an option in my mind."

Northern Tablelands MP Adam Marshall took to the floor of State Parliament last week, giving notice of a motion condemning the IPART determination and urging the body to review its "paltry" increase figure urgently.

In September 2021, IPART released a report reviewing the rate peg to include population growth.

Mr Marshall said small to medium-sized rural councils were being discriminated against, starved of revenue at a time when mandated wage rises were imminent, and the cost of operating was sky-rocketing.

"This is a savage blow to our region's local councils' ability to deliver the services and infrastructure expected by their ratepayers and residents," Mr Marshall said.

"I am in absolute disbelief that the independent regulator would make a decision which would see councils start the financial year with an externally-imposed deficit position.

"This paltry increase will not even provide councils with enough additional revenue to cover increases in fixed costs, such as award determined staff salary increases, rising fuel costs for road plant and equipment and other external statutory charges.

"At a 0.7 per cent rise, Armidale Regional Council is only forecast to increase rate revenue $135,000 next financial year.

"Taking into consideration the mandatory staff salary increase in the award, the wages bill will spike by $485,000 - the rate rise will only cover a quarter of that extra cost.

"At Inverell, it's a similar story. IPART's determination will see only an additional $103,000 added to the budget, yet it's facing an increase to its wage bill of $353,000.

"For councils with a smaller rate base, like Gwydir Shire, the ramifications of the rate peg are severe. It forecasts only $58,000 in additional revenue will be added to its operating budget, which pales compared to the $295,000 in additional wage costs it faces next financial year.

"The sad thing is its rural people who will suffer when cuts have to be made to vitals services, community grants and infrastructure delivery - just so councils can keep their lights on."

"This is not fair, and it isn't right - our country communities and rural councils deserve far better."

Mr Marshall called on the IPART to immediately review its decision.

"This is the lowest rate peg in two decades, and IPART must go back and look at how the determination will impact the health of regional communities, then adjust the rate accordingly," he said.

"If there is no movement, I will be requesting the Minister for Local Government to take action to fix this broken system and establish a system which delivers fairness and equity for rural councils and their communities."

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