Councils that were "short changed" and only received a 0.7 per cent rate peg can now apply for a one-off Additional Special Variation (ASV) to make-up the difference, a statement from the council said.

Council has endorsed the preparation of the one-off application for the 2022-2023 financial year to the maximum level of 2.5 per cent permissible and on a permanent basis.

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Last month the Office of Local Government announced guidelines for an ASV process for the 2022-2023 financial year.

That came after a backlash from council's across the state after the Independent Pricing and Regulatory Tribunal (IPART) ruled that councils could not increase rate revenue (Rate peg) more than 0.7 per cent in the 2022-2023 financial year.

Northern Tablelands MP Adam Marshall took to the floor of State Parliament in February, 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.

General manager James Roncon said the 0.7 per cent was the equivalent of only $130,000 towards maintaining essential community infrastructure with a value of $806 million.

"To say it was a shock when we received the news last year that the annual rate peg determined was 0.7 per cent was an understatement," Mr Roncon said.

"Like many councils across the state we are juggling the increasing cost of maintaining services to the community with limited capacity to generate more income.

"By applying for the maximum 2.5 per cent one-off Addition Special Variation our revenue from rates will be on target with council's long term financial modelling, not a reduction."

The only way councils across NSW can generate additional rate revenue is through the annual rate peg or by applying for a Special Rate Variation.

A statement from the council said if it did not apply for the maximum one-off ASV, funding levels would be reduced from rate revenue forecast increases of 2.5 per cent annually, their financial position would worsen.

"The ASV application will be simpler and not intended to address a variation to general income above an amount greater than the annual rate peg," the council press release said.

"The Office of Local Government and IPART recognise that, due to the delayed council elections and the determination of the 2022-23 rate peg at a lower rate than councils had forecast, councils may not have had sufficient time to prepare a special variation application within the normal timeframe."

Council's application to IPART is due by April 29.

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