�The lower rates shouldn�t have any impact on our planned works, but it prevents the rebuilding of our infrastructure reserve funds,� Mr Norris said.
He said cutting other areas of the council�s programs, or asset sales, may be needed to build up reserves, used in preparation for now failed mergers.
Last month, former councillor Colin Chomley said Mosman Park�s proposed rates rise was only surpassed by neighbouring Peppermint Grove Council�s 7.9 per cent, which had been caused by the costs of a historic legal case and building The Grove library.
Councillors accepted Cr Brett Pollock�s motion to reduce by $120,000 the amount proposed to go to reserves in the draft 2015-16 budget and introduce the lower rates rise.
Budget debate followed Premier Colin Barnett�s comments recently that rates rises should be at the CPI of about 2.25 per cent.
Mr Norris said increases limited to CPI would not allow councils to start new projects or replenish reserves affected by the failed merger process. However, Mosman Park will not follow the City of Bayswater in notifying residents their rates will help repay spending on mergers that had not been refunded by the State Government.
Mosman Park claims it can prove it spent at least $150,000, with about $300,000 of notional council staff time.
Bayswater supported joining Bassendean Council, parts of Stirling and Swan councils and Dianella and spent $1.2 million before Mr Barnett cancelled the merger process in February. Bayswater�s 2015-2016 budget bulletin explained the use of rates to recover costs.
Bayswater Mayor Sylvan said he would not speculate if his council�s 3.7 per cent rates rise would have been greater if mergers had gone ahead but he expected ratepayers and rates would have benefitted from �efficiencies and savings� in future years.