The Government says ratepayers may have to fund swimming pools and libraries in their communities without the aid of development levies.
At present, councils can collect money from property developers for such facilities.
But under a proposed law change, councils would only be able to charge developers for community halls, public toilets and park playgrounds.
Some councils say that will lead to unaffordable rate rises.
Waikato District Council strategy manager Tony Whittaker says ratepayers will have to pick up the tab, and if the bill proceeds, annual rate increases in Waikato could double.
Mr Whittaker says people already struggle to pay rates at the present level.
But the chair of the Local Government and Environment Select Committee, Nicky Wagner, says the change may be necessary to push house prices down. She says the question is whether developers should be paying for a community's "nice-to-haves".
Property developers are happy with the proposed law change and want to push it further. Environmental lawyer Sue Simons says her clients want to be able to object to paying any contribution at all.
She says the objection process is fair, and stops councils from being able to force them to pay unnecessarily.
Mrs Simons has led precedent-setting cases for property developers fighting council-imposed contributions.
