In a written response to Mr Bott's comments, a police spokesperson said the baseline budget had not been frozen, and its operating funding would increase $41 million per annum over the next four years.
The spokesperson said police were making operational changes around the country "to serve their communities better", but said there had been no reduction in police staffing.
In 2011, the Ministry of Justice announced a target of reducing crime by 15 per cent by 2017. The number of prosecutions in Masterton has dropped 34 per cent since.
Mr Bott said an increase in guilty pleas had affected the conviction rate too.
He said difficulties receiving legal aid had led to an increase in defendants representing themselves in court.
"Often they've got no idea how to present their case, what matters are legally relevant to their case and what their defences are. Because of that, you see people who've got defences slipping under the radar and coming out as guilty statistics," he said.
Mr Bott said some people's legal decisions could be influenced by the possibility of having to pay legal aid funding back.
"[A defendant may] see the potential cost involved and say, 'blow it, I'm just going to plead guilty and save myself some money'."
Police Association president Greg O'Connor said higher success rates in court were due to fewer low-level offenders being prosecuted -- instead being given pre-charge warnings.
Since 2011, nationwide prosecution and conviction numbers have dropped 28 per cent and 27 per cent respectively, which he said had led to a potential long-term crime crisis.
"Police have way overshot," Mr O'Connor said. "I don't think anyone believes the behaviour on the street has improved at all. I don't think anybody believes there are less people offending or that there's less lower level offending taking place."
He said offenders were realising low-level crimes would often go unpunished.
"One of the problems is now you have a generation of people who have grown up understanding that actually there are no real consequences for a lot of behaviours, other than the inconvenience of being dragged back to a police station and kicked out an hour later.
"They have no fear of the system."
Mr O'Connor said he was unsure how the long-term effects of pre-charge warnings would balance out against the short-term benefits.
"If you are the Government and want to put out press releases that say the number of arrests have gone down and the number of court appearances have gone down, then yes it's a great policy."
