Illawarra residents are paying some of the highest rates in NSW, with the region's three councils ranked among the 25 most expensive.
Minister for Local Government Barbara Perry this week released a report card comparing the state's 152 councils for 2008-09.
Average residential rates of $1040 made Kiama the most expensive place to own a property outside Sydney, with the Kiama local government area slugging residents with the fifth highest rates in the state.
Only Hunters Hill, North Sydney, Ku-ring-gai and Mosman had higher average residential rates.
Despite rates rising $25 for the year, Kiama dropped from being the fourth most expensive region the previous year.
A council spokeswoman said a low number of commercial and industrial properties reduced the ability to share the rate burden.
"Kiama also has high coastal land values which skew the rate average," she said. The additional income allowed the council to spend more per capita on services, such as community services, she said.
Wollongong and Shellharbour councils also recorded residential rates well above the NSW average of $760, to be ranked 14th and 22nd respectively.
Residential rates averaged $944 in Wollongong and $864 in Shellharbour.
Shellharbour City Council general manager Brian Weir said rates income was vital to cater to the city's diverse age groups and provide facilities for six distinct communities including Shellharbour Village, Oak Flats and Warilla.
A Wollongong City Council spokeswoman said the above-average rates were "offset to some degree by a comparatively lower percentage of revenue from user fees and charges". Much of the money is being spent on the council's ageing facilities.
"Unlike some councils we do not have special rates on residential properties in the form of environmental or infrastructure levies," the spokeswoman said.
The government report card also compared spending on services.
In Wollongong, spending on community services - such as child care, youth and family services - averaged just $21 per person. The figure was less than one-third of the average for NSW ($65) and less than half the $49 per person spent by Shellharbour.
In comparison, Kiama council spent $479.56 per capita on community services - 22 times more than Wollongong.
Shellharbour City Council was the region's biggest spender on recreation and leisure facilities including pools, parks and sportsgrounds, averaging $113 per person.
"Sportsgrounds and recreation have been a big driver for 30 or 40 years, so we have a lot of playing fields to maintain," Mr Weir said.
Wollongong spent just $67 per person, while the $85 per person that Kiama spent on leisure and recreation was close to the NSW average of $83.
Shellharbour was the lowest performer on environmental management and health, which takes in food inspections, pest management and weed control. Shellharbour's spending of $9 per person was only a third of the $30 NSW average. Mr Weir said the figure probably reflected how Shellharbour divided its services into categories, rather than actual spending.
Wollongong spent $35 per person on the environment and health, while Kiama's spending was more than double that amount at $76 per person.
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