It’s understood Labor will hold a special caucus meeting in coming days to decide its own position on the contentious policy – one of the Liberals’ longstanding election commitments.

With SA Best and the Greens maintaining their pre-election opposition to the legislation, Labor’s decision is set to make or break the bill.

A special LGA board meeting today, attended by around 20 mayors, resolved to strongly oppose the policy after only three councils – Marion, Orrorroo Carrieton and Victor Harbor – backed the bill.

The resolution stated that there was “no factual evidence that this legislation will improve the efficiency and effectiveness of local government to deliver long-term benefits to SA communities”.

The State Government responded furiously, saying that if councils “refuse to come on board and we have to drag them to the table in order to protect South Australian ratepayers – then we will”.

LGA president Sue Clearihan told InDaily after the meeting that the position was backed by around 82 per cent of councils.

“We’re very confident that we can make a case to our ratepayers and members of our communities as to why rate capping policy is not good policy, and why we see it as poor public policy,” she said.

“This is not about politicians or parties – this decision has been made on the policy.”

She said evidence from interstate – particularly New South Wales, where rate-capping has been in place for decades – suggested it “impacted negatively on local services and infrastructure and the financial sustainability of councils”.

Asked if the LGA would urge Labor to back its resolution, Clearihan said: “The board has taken upon itself to lobby every Labor member of both houses.”

“We have a certain expectation that they honour their pre-election position.”

Mid Murray Mayor Dave Burgess said the issue was “about the communities deciding their future and making councils accountable, rather than someone on North Terrace making elected members accountable”.

“This is one level of government telling another level of government how to run their business,” he said.

The LGA maintained regional councils would be “hardest hit” by the legislation, a position backed by Tumby Bay mayor Sam Telfer, who said it was unfair to apply “a flat cap” to smaller councils that were “in a totally different financial state to begin with”.

Jamestown mayor Denis Clark echoed that, insisting his residents were “not concerned about rate-capping” but about declining services.

Prospect mayor David O’Loughlin, who is president of the Australian Local Government Association, said regional NSW was “widely regarded as having the worst road network in the country – as a direct result of rate pegging”.

“I don’t want to be driving on a regional road that local council has had to cut back maintenance on,” he said.

But he insisted councils “want to cut costs – and we’re very happy the Government is also interested in cutting costs”.

He said the State Government should focus on reigning in spiralling levies of its own.

Labor Local Government spokesman Tony Piccolo told InDaily the LGA decision was “a matter we will take into account but it will not determine our position”.

“We continue to consult with various stakeholders,” he said.

Piccolo is currently in the South-East “speaking with community and local government”.

“We will announce our position in time for debate in the Legislative Council when parliament resumes after the winter break,” he said.

Local Government MInister Stephan Knoll accused the LGA of voting to “let down the community that voted for them”.

“It’s an extremely disappointing decision,” he said.

“The State Government has been working with the local government sector but if they refuse to come on board and we have to drag them to the table in order to protect South Australian ratepayers – then we will.

“Peter Malinauskas must come out of hiding, show some leadership and explain why he is standing in the way of the Marshall Government’s plan to cap council rates in the face of overwhelming support from South Australians.”