Local government councils around the ACT are financially sustainable in the short term, but the biggest of them, in Queanbeyan, has scored a weak assessment from the NSW Treasury.
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Palerang Council, once considered a financial basket case, scored a higher moderate rating, as did Yass and Goulburn Mulwaree, while Cooma-Monaro Shire Council also scored a weak rating.
Palerang Council's general manager, Peter Bascomb, said how the Independent Local Government Review Panel would use the findings was unknown.
''But you would have to question the wisdom of amalgamating a small, moderately sustainable council with a larger council rated as weak,'' Mr Bascomb said.
Queanbeyan City Council was not surprised it scored a weak rating and blamed previous councils for not putting away enough money to replace old assets.
In a statement, the council says the three-year outlook of neutral rating was better than many other councils that scored negative assessments.
General manager Gary Chapman said the council was forced to levy a special rate variation three years ago to raise enough money to replace assets such as roads, footpaths and sports fields.
A moderate rating indicates minor or moderate operating deficits. Moderately rated councils are likely to be able to address unforeseen financial shocks, according to the report by the NSW Treasury Corporation (TCorp), a unit within Treasury.
Palerang Council's three-year outlook, along with 48 per cent of all councils, is rated as negative, which means it is could face financial difficulties.
''This is no surprise,'' Mr Bascomb said. ''I and many others working in local government have spoken frequently about the infrastructure backlog - asset renewal and replacement jobs that should have been done in the past but were not done due to lack of money or questionable policy decisions at council level.
''Others have referred to it as a freight train heading our way.''
Goulburn Mulwaree Council's corporate services director, Brendan Hollands, said in the last four years since the council had revalued its assets, depreciation had nearly doubled, which had a large impact on its financial sustainability.
Mr Hollands was concerned with TCorp's narrow focus. A wider assessment would have painted a better picture, he said.
With policy changes, Goulburn's negative outlook could be turned around quickly.
Goulburn had large water and sewer infrastructure compared with many other councils and had taken on a large debt to help pay for a pipeline from the southern highlands.
''When you add in $10 million, which makes up nearly a quarter of our overall debt, it does make the debt service ratios [look] worse than they actually are,'' Mr Hollands said.