A Kāpiti Coast District councillor has written to ministers and MPs urging them to establish a Royal Commission on local government.
Councillor Gwynn Compton said the sector was reaching "crisis point" and needed to be overhauled so it was fit for purpose.
He said it was clear the arrangements put in place more than 40 years ago were not coping with the significant challenges facing local government.
National's local government spokesperson Christopher Luxon, who was one of the recipents of Compton's letter, said a Royal Commission would be a step too far at this point.
But he acknowledged change was needed.
"There are plenty of issues plaguing local government right now and the system needs serious overhauling, particularly when it comes to infrastructure."
Between rapid population growth, decades of underinvestment in infrastructure coming home to roost, Three Waters reform, climate change, and the Covid-19 pandemic fallout, councils are carrying a heavy burden.
"It's becoming increasingly apparent that the structure and financing of local government isn't a good fit for the challenges it now finds itself facing, Compton said.
"Its heavy dependence on property rates to fund the services and community facilities it provides has been shown to be politically and financially unsustainable in the long-term, with councils around New Zealand now under enormous pressure with the shortcomings of that dependency coming home to roost."
For example, Wellington City Council is currently in the midst of trying to find ways to reduce a forecast 23 per cent rates increase next year.
Compton said the Royal Commission on Auckland Governance played a critical role in the eventual Super City reorganisation.
He said the approach taken by the Local Government Commission for the Wellington region lacked any political weight with decision makers and the wider community.
The terms of reference for the Royal Commission would ideally cover the role, structure, and financing of local government, ensuring a consistent approach to Māori wards and iwi participation across the country, and include a review the role of the Local Government Commission, Compton said.
He said the call for a Royal Commission was his own personal view, but was aware of significant support for reform from elected members across New Zealand.