Overall debt levels for local councils are on the rise.

Briefing documents to new Local Government Minister Rodney Hide show local authority debt levels rose by more than 60 percent between 2004 and 2007, from $1.9 billion to more than $3.2 billion.

Much of the pressure appears to be driven by capital expenditure on infrastructure. The papers says in the last financial year councils spent more than $3.3 billion on fixed assets, an increase of almost 40 percent from 2006.

The papers say councils which rely on funding from investments may face substantial losses, because of the decline on world markets. They also indicate some councils are having trouble accessing debt funding and some that have it face severe constraints in servicing their loans.

The briefing predicts some councils may cut spending or raise rates to compensate for lost income.