Residents in the City of Oak Harbor will pay 1 percent more in property taxes next year.

For the owner of a home worth $225,000, that equates to an extra $5.38 a year in property taxes.

City Council members approved the tax hike Wednesday night after a lengthy discussion about the budget despite the urging of Mayor Scott Dudley to reject the increase.

Under state law, the city may increase property tax collection by the lower of 1 percent or the rate of inflation set by the implicit price deflator, unless a greater increase is approved by a vote of the people.

Finance Director Doug Merriman recommended the increase. He gave a presentation that showed inflation and city expenses are far outpacing the 1 percent limit.

Merriman said the 1 percent increase will generate an extra $39,000 in tax revenues next year, an assumption incorporated into the 2014 budget.

If the council members hadn’t adopted the increase, he said, they would have to find a $39,000 reoccurring expense to cut.

Several people urged the council not to increase the tax.

Dudley told the council that they could forego the tax increase and balance the budget by cutting the $30,000 a year funding for artwork which is generated through a quarter percent tax on three utilities. The tax goes into the general fund, but is currently earmarked for the purchase of art.

“What this becomes is death by a thousand cuts,” said Sandi Peterson, who was one of two audience members to speak against the increase.

Peterson challenged Councilman Joel Servatius for council in Tuesday’s general election. It appears Servatius is holding a narrow lead in the race.

Peterson pointed to the cumulative effect of tax increases from the voter-approved hospital levy and school levies.

Councilman Bob Severns said he was opposed to the tax because he listened to voters during his campaign and many people are still having a hard time making ends meet. Councilman Jim Campbell also expressed his reservations.

The majority of council members, however, approved of the tax increase.

Councilwoman Beth Munns said the city is already understaffed and she’s worried that the city can’t afford more full-time firefighters.

Councilwoman Tara Hizon noted that the tax increase would only be around $4 or $5 a year for the average homeowner.

“That’s a latte. We’re talking 1 percent,” she said.

“I get that this is indicative of a larger problem and every percent matters, but those other tax increase and levies were voted on,” Hizon said, referring to comments about other levy increases.

“They approved them.  They are willing to pay for services when they feel like they are getting a value.”

The tax increase passed by a vote of 6-1, with Severns dissenting.