Buloke chief executive John Hicks said capping council rates at the Consumer Price Index and the federal government freeze on financial assistance grants could result in rural residents missing out on basic services.

At a meeting on Monday night, Horsham Rural City Council threw its support behind Buloke's campaign to influence a change in state and federal government funding policies.

Horsham councillor Pam Clarke said the effects would be devastating for rural councils.

"You give it 12 months with a CPI rise of 2.7 per cent and rural councils are going to go down very quickly," she said.

"They will not be able to sustain themselves, they will not be able to fix the roads, they will not be able to collect the garbage or do all the services their community should, by rights, expect."

Buloke is fighting for a more equitable distribution of grant funding, enabling rural councils to provide minimum local government services to residents.

Cr Clarke said it was a serious issue for all rural councils.

"It will impact Horsham right away, but it won't impact us to the point of going bankrupt," she said.

"These small regional councils - such as Buloke - are on that brink every year."

Mr Hicks said council had reduced its number off staff from 138 to 115 in the past 12 months.

"That's through natural attrition, but we can't afford to hire anyone else either," he said.

"Staffing numbers affect the services we can offer, and it also affects the number of job opportunities in the municipality."

Buloke council has produced a document titled 'Minimum Local Government Service Levels for Victorians' and is seeking support to influence the governments to improve liveability for rural residents.

Horsham Mayor Mark Radford said it was important Horsham, as a regional leader, stood behind its neighbours.

"It certainly was very sobering to hear the efforts they are going through," he said.

"Some of them are quite extraordinary and they are quite intentional about what they are trying to achieve."

Cr Heather Phillips complimented Buloke on its approach.

"They've had to do it because they are in between a rock and a hard place," she said.

"The rates only go so far and they cannot afford all the nice little extras large municipalities can perhaps afford for their ratepayers."

Mr Hicks said the municipality had reduced its expenditure to ensure it stayed sustainable.

"This has involved a review of all services, the development of efficiencies and, unfortunately, a reduction in some service levels," he said.

"A hard lesson learned in this time is the level of services that can be provided to rural residents is considerably less than those that can be provided to residents in more densely settled areas."

Mr Hicks said the Local Govermnent Act required councils to work in partnership with the state and federal governments to meet the best outcomes for communities and improve their overall quality of life.

"This responsibility is not being met by these partners under the current fiscal arrangement," he said.

Cr Tony Phelan said Buloke had started an interesting discussion.

"People in remote rural municipalities should not have to put up with less than the minimum standard," he said.

"We need to be on the bandwagon and highlight the commitment to communities is a commitment by all levels of government.

"One level can't pull the pin and pass the obligation onto others.

"I don't think it just affects small communities. I think it has an impact on us as well."

Cr David Grimble said Buloke Shire Council should not be acting in isolation.

"A collective response on behalf of some of the groups they are looking to for support is a really smart outcome," he said.

"Some of the things they raise, they are not different to other councils across Victoria."

Mr Hicks said the campaign's success would be highly dependent on developing a collaborative approach.

Buloke Shire Council is seeking support from a number of groups and organisations, including the Municipal Association of Victoria, Rural Councils Victoria and the North West Municipalities Association.

It plans to set up a community working group in May to develop an action plan before meeting with representatives from state, federal and local government.