Auckland Council's budget committee has voted 16-7 for a proposal to increase rates by 3.5 per cent for each year of a new 10-year budget.
The proposal got the backing of Mayor Len Brown, who promised voters to hold rates at 2.5 per cent this term.
For a 3.5 per cent increase: Len Brown, Penny Webster, Arthur Anae, Cathy Casey, Bill Cashmore, Ross Clow, Linda Cooper, Chris Darby, Alf Filipaina, Penny Hulse, Mike Lee, Calum Penrose, John Walker, Wayne Walker and Maori Statutory Board members David Taipari and John Tamihere.
Against: Cameron Brewer, Chris Fletcher, Denise Krum, Dick Quax, Sharon Stewart, John Watson, George Wood.
The new rates proposal replaces an earlier proposal by Mr Brown to increase rates by 2.5 per cent in the first two years and 3.5 per cent thereafter.
The 3.5 per cent rates proposal includes a $20 million increase in the target for sale of non-strategic assets and increasing development contributions at the rate of inflation each year.
Mr Brown told this morning's budget committee he could see no other way of bridging a funding gap between what communities wanted and what the council could provide within its financial parameters.
An earlier proposal by Mr Brown was for a 2.5 per cent rates rises for the first two years and 3.5 per cent thereafter.
The new proposal is for rates increases of 3.5 per cent for each of the next 10 years - a cumulative total of 41 per cent over the next decade.
The latest inflation figure is 1 per cent for the year to September.
Auckland councillors are in a marathon meeting this morning to consider a 10-year budget with far-reaching consequences for ratepayers in the form of big rates increases for many, huge proposed cuts to transport, parks and community services and a possible deferral for the $2.4 billion city rail link.
A proposal to introduce a $2 motorway toll or a regional fuel tax is also on the table.
Concerns by the 21 local boards about $800 million of proposed cuts to community services and parks has led to two new proposals being tabled, both including higher rates.
Councillor Cameron Brewer said instead of increasing rates, the council should be looking at savings from its $3 billion operational budget.
"That is what the Government has successfully done and that is what I am inviting you to do," Mr Brewer said.
Mr Brewer supported holding rates to 2.5 per cent next year, and 3.5 per cent thereafter.
The extra 1 per cent will provide an extra $15 million of income for the council to fund capital works and running costs for a range of community projects, many of which faced the axe under an earlier budget proposal.
Chief executive Stephen Town said officers had found significant efficiency savings, but the council was taking on more debt and did not have the revenue to pay for it.
Mr Wood said the mayor had promised reductions in the running of the Super City and had to deliver.
"The mayor has waved his magic wand in most years and being able to reduce the rates," he said.
Budget papers show that "high priority' parks, community and lifestyle capital works worth $420 million over the next six years could not proceed without raising rates.
Nearly one in four households face rates increases of more than 10 per cent, largely due to big rises in property valuations. Other ratepayers, on Great Barrier Island, Waiheke Island and West Auckland, will have rate decreases.
Right-leaning councillor Chris Fletcher said "public fear around crippling rate increases is real".
The budget committee meeting is expected to last two days.