Council tax payers in Bourne and The Deepings face a hike in their bills as South District Council moves to protect ‘front line’ services this year.
It works out at £5 a year for Band D properties or just under 10p a week.
The majority of people live in Band A properties and they will pay an extra 6p a week.
The council says the extra cash will help it maintain key services after a two-year freeze on council tax and a cut in funding of £2.4million.
Council leader Linda Neal said: “This was not an easy decision for us but if we make a small increase now it will mean that in future years we will not have to make as large an increase as we might otherwise have to.
“We have managed to maintain all our front line services despite a huge loss in funding and a very small increase in council tax will allow us to continue to do so.”
South Kesteven is pressing ahead with a £2.14million regeneration project in the heart of Bourne, which will see new retail units and homes available in a few months’ time, as well as projects like better street cleaning
The council is also investing £536,000 to deliver super fast broadband across the district and target so-called “white spots” where there is virtually no cover.
The authority has made savings by streamlining management, cutting back office costs and looking at different ways to deliver services. A further £1.4million will be saved during 2013/14.