Councillors are set to decide on Wednesday what their annual fees will be after July 1, within a minimum and maximum amount set by the Local Government Remuneration Tribunal.

Council corporate and community services director Colin Formann has recommended in his report to the meeting that councillors vote for the maximum: $12,160 each and an extra allowance of $26,530 for the mayor.

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The tribunal is the body that decides fees each year, depending on the council's category - from county councils to a metropolitan principal CBD council such as the Council of the City of Sydney.

It has awarded a 2.5 per cent fee increase, which, according to its determination, "is consistent with the government's policy on wages".

Mr Formann's report states: "The tribunal determines the categories of councils and mayoral offices and the allocation of each council and mayoral office into one of those categories, with Gunnedah Shire Council in the rural category.

"The tribunal also determines in each category of council, the maximum and minimum amount of fees to be paid to mayors and councilors of councils."

The tribunal has set the rural councillor fee at $9190 to $12,160. The mayor's role attracts an extra allowance of $9780 to $26,530.

Local Government NSW made a submission to the tribunal in January, arguing for at least a 2.5pc raise.

It stated there was concern the fee structure "fails to recognise the work of elected representatives and is inadequate to attract and retain individuals with the necessary skills and experience".

"We reiterate our long-held view that the current arrangements for setting councillor and mayoral fees ... do not properly compensate them for the significant workload and range of responsibilities of elected members, which are expanding," LGNSW wrote.