YARMOUTH — Town Councilors on Thursday approved a $31.2 million total budget for fiscal year 2010.

The budget will increase the tax rate by 1.86 percent over this year, and residents will pay $19.53 for every $1,000 of assessed value, an increase of 36 cents.

Town Manager Nat Tupper said the School Committee set its budget at $19.4 million, and kept school revenue flat based on information from the state. Recently though, Yarmouth was awarded stimulus funds – about $418,000 more than expected.

At a workshop Thursday before the public budget meeting, councilors and School Committee members agreed that the federal funds would be placed in a reserve account to offset expected budget shortfalls beginning in the 2011 fiscal year.

“We will use this money to fill what is expected to be a large gap in school funding next year,” Tupper said. “Instead of lowering taxes a lot this year, we will lower taxes a little for the next two years.”

Assignment of the $418,000 to a reserve account for school purposes will be voted on by the residents at Town Meeting on June 2.

“If we know we will fall off a cliff next year, we will put a mattress at the bottom to soften the blow,” Tupper said.

Tupper also said that the municipal budget, set at $10.8 million, is $123,000 less than this year, a reduction of 1.1 percent. He said it was possible to see a savings with no changes to programs, services or service levels. Debt service was reduced and savings were generated by not replacing employees who retired.

Tupper said he is concerned about the excise tax referendum, which if approved in November could reduce revenue to the town by nearly $600,000. He said there is a $300,000 contingency plan in place, but the remainder would be made up either through budget cuts, a property tax increase or a combination of the two.

Town Meeting, where residents will vote on the 27 municipal budget articles, is June 2 at the middle school. On June 9, voters will be asked to ratify the school budget and elect two town councilors, three School Committee members and a water district trustee. Voting will take place at the AmVets Hall on North Road from 7 a.m. to 8 p.m.

Amy Anderson can be reached at 781-3661 ext. 110 or [email protected].

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