Preston Council has voted to increase its part of the council tax by two per cent.
The change means that a Band D householder will now pay £274.03 excluding parish precepts, instead of the current £268.
The ruling Labour party, who drew up the budget, said it was in response to the latest central Government funding cuts of 11 per cent.
Council leader Peter Rankin said: “Our budget situation is serious, with serious implications to services we run, the people who use them and the brilliant people who run them.”
As well as a rise in council tax, the budget also includes cuts to insurance covers, potentially ‘mothballing’ the Guild Hall, and the possibility of sharing services with other councils.
Coun Rankin added: “What we have to look at is a combined authority for central Lancashire and we will have to grasp that nettle.
“The problem is that there area few councils fiercely holding onto their independence and we are finding it very difficult to talk to them about it.
“We want to work in partnership with them, it’s not a case of Preston taking over.”
Conservative Councillor Ken Hudson said: “There are councillors who don not want to be working with ‘nasty old Preston’. It sounds good, but it’s not an easy pot of gold.”
Lib Dem Councillor John Potter criticised the budget for not going far enough.
He said: “You are holding off making cuts for as long as possible, but that means when you start, they will be deeper and harder.”