The Norfolk district considered going to judicial review, but decided this would be 'a waste of public money'.
Leader Simon Woodbridge (Con) complained that the commission implied Broadland's council tax is too low.
He said: 'Central government expects us to keep our spending low and run efficient services, yet the [commission's] report says our focus on 'low council tax is a constraint on service development'.'
Customer surveys showed residents wanted low council tax but most were either 'satisfied' or 'very satisfied' with services, said Mr Woodbridge.
'Very clearly, the Audit Commission's view is that we should increase council tax to improve services,' he added. 'We disagree.'
The commission said Broadland had good satisfaction ratings and made good use of resources.
But it criticised it for lacking 'clear ambitions that are informed by community needs', and for insufficient action to meet housing need.
Neighbouring Breckland DC, which also challenged a 'fair' rating, is due to revisited by inspectors next week.