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The City Council on Monday narrowly adopted Rockville's fiscal 2010 budget with an operating budget that is nearly 1 percent less than fiscal 2009 while including salary increases for all city employees.

The adopted operating budget is $101.8 million, a decrease of 0.9 percent, or $893,705.

The Capital Improvements Program is budgeted at $68.2 million, a decrease of nearly $5.5 million over last year.

Councilwoman Anne M. Robbins and Councilwoman Phyllis R. Marcuccio voted against the budget, with Robbins saying her opposition is primarily due to the cost-of-living and merit increases for city employees totaling $1.78 million that is included in the budget, a concern she has raised throughout the budget process.

All 553 full-time employees will receive a 3.25 percent cost-of-living increase. City officials said that 169 union and police employees will receive an automatic 3.25 percent step increase on top of the cost-of-living increase and 366 administrative employees are eligible to receive an increase up to 3.25 percent based on performance above the cost-of-living adjustment.

"We are acting as if Rockville is an island during this recessionary period, separate from everyone else, citing our good management practices as justification for continuing to give generous COLAs, bonuses and step increases," Robbins said.

She said she would have liked to make reductions in pay increases while honoring union employee contracts, such as police officers and other service workers.

Cost-of-living and merit increases for union employees amount to $231,000, Stacey Tate, city budget and finance officer, wrote in an e-mail to The Gazette.

Robbins previously proposed deferring all pay increases by one year, but did not get support from other council members.

The council also heard from residents during public hearings and through e-mail who both opposed and supported pay increases for city staff.

Marcuccio's concern was with the budget process and said she still had outstanding issues that were not addressed.

"The process we use on the budget I'm sure is very efficient and very thorough as far as the staff is concerned, but it's not very satisfying as far as a council member is concerned," Marcuccio said.

She said she had outstanding questions on issues such as licensing fee increases, which she opposed, and other capital improvement items.

The council several weeks ago unanimously adopted a series of budget changes developed by city staff that would give Rockville homeowners a $100 tax credit. One of the changes included in the package was increasing licensing fees that would bring in $200,000 in revenue.

Mayor Susan R. Hoffmann, who along with Councilmen John Britton and Piotr Gajewski voted to adopt the budget, said council members had opportunities to get answers to questions during the budget preview sessions last fall and early spring, staff briefings and during the two worksessions held in the weeks leading up to budget adoption.

"I have been in a classroom situation where I am continually given information," Marcuccio said. "My ability to take that information and process it and sort it so that I can come back with my responses is very limited."

Under the new budget the property tax rate will remain at 29.2 cents per $100 of assessed value. It is the first time in three years that the property tax rate will not decrease. The council decreased the rate by one cent in each of the past three years.

Water rates will increase by 25 percent in fiscal 2010 to $2.78 per 1,000 gallons for the first 12,000 gallons per quarter. That rate goes up to $4 for the next 12,000 gallons and $4.30 for more than 24,000 gallons of water per quarter.

Sewer rates will increase by 3.8 percent to $4.12 per 1,000 gallons.

The average homeowner will spend $248.56 for water per year and $315.76 for sewer.

The budget also includes a new $40 annual stormwater management fee for homeowners, which is lower than the originally proposed $61.85.

The Homeowner's Tax Credit Program for fiscal 2010 will have expanded parameters that will include more people, city staff said. Those who qualify for the program will earn up to $85,000 per year, up from $70,000, and can apply it to the first $400,000 of their home's assessed value, up from $300,000.

Parking ticket fines in the Town Square garages were reduced from $40 to $12, opposed by Marcuccio and Councilman Piotr Gajewski.