Rotorua Lakes Council chief executive Geoff Williams acknowledged LGNZ's paper was, at this stage, simply intended to stimulate discussion about possible funding opportunities and constraints in New Zealand.
"This is a conversation that needs to take place," he said. "However, our council hasn't yet had the chance to consider the report on the review as it has only just been released."
The council's strategy, policy and finance committee chairwoman Merepeka Raukawa-Tait said it was about time the issue was put on the agenda New Zealand-wide.
"If we believe there might be a better, and fairer, funding regime then we shouldn't hesitate to explore that. I'm sure ratepayers would welcome this pro-active move. They don't fancy rates climbing each year and neither do I.
"Although we keep looking for cost-cutting savings, in the end I believe some services will suffer," she said.
"But, why only ratepayer services? Services are used by all residents who reside within our district. I hope central government does consider co-funding some services too."
Hamurana, Kaharoa and Awahou Ratepayer and Residents' Association chairman Jerry Douglas believed any introduction of additional taxes would meet strong opposition from ratepayers.
"The main promise of this council of elected officials was that they would find ways to reduce costs for ratepayers so any other taxes, whatever way they're labelled, would not sit well with residents."
Mr Douglas said his personal view was the council should keep its election promise.
LGNZ president Lawrence Yule said the findings demanded New Zealanders "take a fresh look at the way local government is funded for the benefits of communities".
Current funding shortfalls meant more and more councils faced financial challenges when demand for infrastructure and services was greater than ever, he said.
However, Local Government Minister Paula Bennett said cash-strapped local councils should take a closer look at their spending before seeking more funding or introducing new taxes.
