Sporting groups and vital stormwater infrastructure may have missed out of funding due to Kiama council's continued investment in Blue Haven, a report to a state government inquiry read.
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The council has lodged a submission to the NSW Legislative Council's Standing Committee on State Development inquiry into the ability of local governments to fund infrastructure and services.
That submission has been included in the business papers for Tuesday night's meeting.
Charts that form part of the submission showed that, over the last five years, government grants had steadily accounted for a greater percentage of overall revenue.
They also showed that expenditure generally outpaced the council's incoming revenue.
The submission said local government tended to step in "when services are essential and not being delivered efficiently due to lack of coordinated policy by state/territory or Commonwealth governments or by private market forces".
This, it said, was the case with the council's development of Blue Haven, which led to it becoming "the largest single operator of aged care and retirement village living services of any local government authority" in NSW.
The level of expenditure in aged care may have resulted in other sections of the Kiama community missing out, the council submission stated.
"There is a concern about over-investment in aged care services and commensurate consequential under-investment in civic assets such as swimming pools, sports fields, surf clubs, stormwater, roads, mowing services etc," the council submission stated.
"Each flood event that Kiama Municipal Council faces, stormwater under-investment is made ever more apparent and adds significant risk to the community and council.
"Increasingly the local sporting community require upgraded and more modern assets that are fit for purpose and encourage female participation."
The report also highlights the prospect of an unpleasant future for Kiama.
"With such limited funds, and extremely limited opportunities for revenue raising Kiama Municipal Council faces severe budget cuts, reduced levels of services, operational reductions, continued asset sale, request for special rate variations, or potential downsizing of the organisation," the report stated.
In terms of methods to help Kiama council, the report suggested a sharing of services between councils in the Illawarra and South Coast.
This could include having a central hub to deal with areas like payroll, rates and governance, sharing the costs of "regional assets" like swimming pools and airports as well as avoiding duplication of facilities.
"The risk of duplicating services and infrastructure must also be considered in terms of sustainability and responsible legacy decisions," the report said.
"Not every local authority needs a sport park with a stadium, but every community will want one."
Financially, the report recommended returning the rate of federal Financial Assistance Grants to 1 per cent of Commonwealth tax revenue and looking at a more flexible approach to rate capping as exists in other states.
Glen Humphries
I'm an award-winning senior journalist with the Illawarra Mercury and have well over two decades' worth of experience in newspapers. I cover the three local councils in the Illawarra for the Mercury, state and federal politics, as well as writing for the TV guide. If I'm not writing, I'm reading.
I'm an award-winning senior journalist with the Illawarra Mercury and have well over two decades' worth of experience in newspapers. I cover the three local councils in the Illawarra for the Mercury, state and federal politics, as well as writing for the TV guide. If I'm not writing, I'm reading.
