Gorham Town Council Tuesday approved municipal and school budgets that lower taxes for the town’s property owners.

Councilors approved a 2 percent pay raise for municipal employees, but Scout, the police department’s dog, became a casualty of the tightened budget.

Gorham’s total budget is $42 million. The new municipal budget is $12.4 million, down $136,000 from last year’s $12.5 million. The school budget remains the same at $29.6 million. But with an increase in state subsidy, the budget reduced the local taxpayers’ share to support schools by nearly $350,000.

Gorham voters are being asked to approve the school budget in a validation referendum on Tuesday, June 9. In addition to its budget, the school department expects to receive $535,572 in federal stimulus money.

Gorham’s estimated tax rate was set at $15.90 per $1,000 of evaluation, representing a decrease of 10 cents from the present $16. Under the new rate, property taxes on a home in Gorham valued at $200,000 would be $3,180 or $20 less than last year’s bill.

So far this budget season, Gorham is the only Cumberland County community to reduce its tax rate, Town Councilor Burleigh Loveitt said in the meeting.

In the budget deliberations, town councilors approved filling one vacancy for a police officer and another for a firefighter at about $44,000 each. But the budget doesn’t include $7,300 to cover costs of keeping police canine Scout on active duty.

Chief Ron Shepard said during Tuesday’s meeting recess that the canine costs included veterinary care, food, training, use of a cruiser and overtime pay for an officer. “He’s an excellent tracking dog and trained for drug searches,” said Shepard, who added that Scout was involved in 18 searches last year.

Detective Sears Edwards is the canine officer.