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Waitaki Mayor Alex Familton described that as ''a success''.
''It has not been arrived at without considerable trial and error, pushing and searching and chipping,'' he said.
The proposed increase is in a draft annual plan finalised at a council meeting yesterday for consultation next month.
In its long-term plan, the council predicted a 4.7% rise for the 2013-14 financial year, but has reduced the increase to 3.5%.
The council proposes to collect $28.159 million in rates next financial year, compared with $27.21 million this financial year.
When contacted after the meeting, Waitaki Concerned Citizens and Ratepayers' chairman Warren Crawford welcomed the reduction over what was predicted, describing it as ''a move in the right direction''.
''With so many redundancies [in Oamaru], people are going to find it difficult to pay rates,'' he said.
Mr Crawford would like to see further reductions, but could not comment in detail until he had seen the full draft plan.
The group plans a public meeting on March 18, in the Blind Foundation hall, to hear the council outline the draft plan.
Yesterday, the council considered a final list of additions and alterations to the draft plan, including removing some of the costs away from rates to alternative sources.
The most substantial reductions were $137,000 for operating the Oamaru water scheme and $170,000 for the Oamaru sewage treatment scheme costs.
In both cases, money accumulated in operating reserves had built up to such a level they far exceeded any requirements, meaning some could be used to offset the costs of the scheme.
A $583,000 programme to upgrade Weston's footpaths, kerbing and channelling was also included, but had no effect on rates because it would be repaid from the amenity rate.
The council allocated an extra $455,000 towards roading, with $107,000 from rates and the rest from the New Zealand Transport Authority subsidies. Some of the money is needed to maintain roads taken over by the council from Meridian Energy Ltd, around the upper Waitaki power scheme.
The council has renewed its $72,000 grant to the Waitaki Recreation Centre, allocated $48,000 for services to its North End business park, $50,000 for work to continue on Moeraki land stabilisation issues and $60,000 for earthquake-prone building assessments, all coming from rates.
Yesterday, the council approved changes to the plan which added $335,000 overall to the rates needed.
They were proposals which had come up since the last major discussion in November on the draft annual plan.
Cr Kevin Malcolm said the extra items were being added to a draft plan, which people then had a chance to comment on.
The draft annual plan will go for formal approval to an extra ordinary council meeting on March 12 and then go out for public submissions.
Submissions close on April 22, will be heard and considered by council before adopting the annual plan on June 25.