Harrogate Borough Council has unanimously approved plans to increase council tax by 1.99 per cent.
The move, which was voted through at a Full Council meeting on Wednesday evening, will mean an annual increase of £4.37, or eight pence per week, for a Band D household.
It will be the first time the council has put up its element of the tax since 2009, following a six year freeze.
A report presented to the Cabinet on January 6 explained that, since 2010, the council's Government grant allocation had reduced by £5.4m (54 per cent).
Their overall net expenditure had also reduced by £6.9m (28 per cent), and the Government has indicated council funding will cease completely by 2020.
As a result, the council agreed to increase their tax but stressed they have now produced a balanced budget without cutting any front line services.
Leader of Harrogate Borough Council, Coun Richard Cooper said that, despite the increase, the budget was right for both the council and the tax payer.
He said: "We have been the envy of many other local authorities having been able to freeze the Harrogate borough element of the council tax for the last six years.
"However, to ensure we are able to continue providing the best possible service for our residents, we have had to take this into consideration the next financial year.
"This is the finest budget I have seen in my sixteen years as a councillor.
"We have worked together with members of the other political parties, adopted their views and produced a balanced budget which protects the council and ensures that we can continue to provide the front line services which are important to our district’s residents."
Despite the importance of the meeting, almost one quarter of councillors failed to turn up with only 40 out of the 54 in attendance.
The council said they had been able to identify more than £2.6m in savings and new income to meet external cost pressure, up from £968,000 the year before.
The Liberal Democrats also supported plans to increase the council tax and said it was the 'only way' to tackle government budget cuts.
However, leader of the opposition, Coun Pat Marsh, also called for a review of council staff pay to implement the new Living Wage by 2020.
She said: "“This is history in the making as the whole council, irrespective of party politics is coming together to support this budget.
"I think this is the best presented budget I have seen in 25 years and congratulations should go to all those involved in bringing the budget together.
"Our council staff have not been forgotten and the amendment that we put forward and accepted as part of the budget, concerning the Living Wage and how we can maintain salary differentials, will be considered at the earliest opportunity.
"It is never easy to say we are going to raise council tax, but it would be remiss of us not to have done this as it would have put the services the council provides in jeopardy."