Council tax in West Lindsey is going up 5p per week to help the local authority deal with a £1m cut in government funding.
West Lindsey District Council’s proposed increase in council tax will see the average band D household paying an extra £2.79 per year in 2013/14 - this comes after a three-year freeze.
And the government funding cut means the council is having to look at different ways of saving money, meaning redundancies could be a possibility.
Policy and resources committee chairman Coun Tom Regis said: “We will continue to look at ways of avoiding service reduction and redundancies, but being realistic, this is now getting more difficult to sustain.
“However, our innovative approach and sound financial management has paid off so far.”
The council is proposing to use reserves to help the most vulnerable communities facing hardship such as fuel poverty.
And the budget report says the council carry on being entrepreneurial in how it makes savings and brings in new income.
Later this year residents will be asked how they think the council should save money over the coming years - whether this is service reduction or a greater increase in council tax.
Coun Regis said: “We will carry out an extensive engagement exercise with communities and residents over the spring and summer.
“They will be able to inform future priorities and identify where we could make cuts to the budget.”
The budget also proposes to continue to invest in major projects that will help the district “grow and prosper”.
Council leader Burt Keimach said: “We are devoting £300,000 to vulnerable communities to help with fuel poverty, youth unemployment and rural services.
“As well as investing £1.6 million into the housing infrastructure and £2 million boosting the economy and encouraging jobs growth.”
Prosperous communities committee chairman Coun Malcolm Parish said: “We have invested money in communities with a new ball park for Hemswell, support for village halls, community volunteering, funding, jubilee and Olympic events.
“We will continue our investment in communities.”
The budget will go to the council for approval this Monday, March 4.