"Roading is the largest activity in terms of cost for the Tararua District Council and funding from the NZTA through the FAR system makes up the majority of that funding," Malcolm Thomas, council's strategy and policy adviser told councillors.
"Any changes to the FAR system could have significant impacts on either the level of local funding required (rates) and/or the levels of service delivered to local residents."
Tararua District mayor Roly Ellis said changes would either mean higher rates and/or less money to spend on roading maintenance.
The council receives a significant amount of funding from NZTA and in the 2012/13 year this amounted to $8.4 million, from a total roading expenditure of $15.7 million.
Mr Thomas told councillors every one per cent reduction in the funding would mean the need to increase roading rates by 1.4 per cent, or reduce the level of service.
However, the NZTA does accept the ability of ratepayers to afford transport activities should be taken into account when determining the FAR.
Councillor Keith Fenemore emphasised how reliant many rural areas in the district are on agency's roading system.
"There are no bus or other road services available, and in a lot of cases residents are totally reliant on the roads," he said.
Mr Ellis said he had written to the Minister of Primary Industries Nathan Guy about the way the NZTA had handled the issue.
"I was quite surprised because he didn't realise there was a problem," he said.
"Joanne Hayes (National List MP who is seeking selection as National candidate for the district) simply didn't understand."
