Residents in North Kesteven will pay 3.23% more for their district council’s share of council tax.
It comes after councillors at North Kesteven District Council approved the increase at a meeting of the full council on Tuesday, March 6.
The authority’s share of the council tax will now increase for a band D property from £154.80 to £159.75 a year.
This is on top of Lincolnshire County Council’s general council tax increase of 4.95%.
Meanwhile, the North Kesteven council will be part of the Lincolnshire business rates pilot, which will see the authority retain 100% of business rates in 2018/19.
As part of the retention scheme, the council will not receive any revenue support grant from central government in 2018/19 as full business rates will fund the grant under pilot conditions.
The council will also not receive a rural service delivery grant from the government under the scheme.
Richard Wright, leader of North Kesteven District Council , said: “This is a well considered budget and it is appreciated that we have had some assistance from the government.
“What we have done today is realised that we have got a balanced budget, but the only way we can maintain that is by increasing the council tax by a very small amount.”
He added that the council has seen a funding gap in the loss of support from central government as part of the business rate retention scheme.
“The funding gap is where the revenue support grant is disappearing completely and that’s money traditionally given from central government to local government and that ends in the next year,” he said.
“Therefore, going forward there is potentially a funding gap and that could be when the business rates are reset and the government intervention in our finances has finished.
“We are hoping that it will continue, but it is a pilot and we are thankful to have been chosen to be one of the pilot areas.
“We are hoping this shows there is a requirement for that and feeding business rates back into the local area benefits more than going to central government.”
Meanwhile, Councillor Peter Lundgren from the Lincolnshire Independents said residents will support a council tax rise if they know that it will deliver.
He said: “In many ways, when a council can demonstrate that it can deliver then it is acceptable.
“In this case, the proposed increase in the precept is acceptable.”
An amendment to the council’s financial plan proposing the building of a local health facility at Witham St Hughs, allocation of money for councillor training, increasing the target for the use of empty homes and auditing the use of non-recyclable and single use plastics was voted down.
Councillors passed the financial plan for 2018/19 by 28 votes to one with four abstentions.