NORTHFIELD — The city formally introduced its $12.6 million budget at its City Council meeting Tuesday.

The budget, up $374,023, or a little more than 3 percent, includes significantly more local taxes and surplus funds to balance reduced aid from the state and other sources.

The city will use $1.38 million in surplus, an increase of 14.9 percent over last year, according to budget documents provided at the meeting. The budget also will raise the total amount of local taxes by $641,644, an 8.8 percent increase.

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This is the first year new assessments take effect following a revaluation, City Council President Tim Carew said. With the newer figures, the municipal tax rate is set to decrease from $1.33 to $0.80 per $100 assessed value.

The budget also included savings from a pair of memorandums of understanding between the city and unions that City Council approved Tuesday night. Copies were not immediately available to the public.

The first memorandum, with the United Workers Union Local No. 420, dealt with public works employees. Carew said after the meeting it saved about $40,000 by eliminating vacation buybacks and clothing allowances, while requiring employees who work overtime to take that time off rather than paying them overtime.

The second memorandum, with the Northfield Professional Firefighters’ Association Local No. 2364, saved about $60,000, Carew said.

The agreement eliminated vacation buybacks and clothing allowances and reduced EMT stipends. The city also would not put up $10,000 for a matching grant, Carew said, and would save $6,000 by reusing personal protective gear.

The budget will have a public hearing on May 1 and a final vote May 25.

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