A tax increase of 2.37 percent included in the proposed $298-million city budget plan for the coming fiscal year will allow Cranston to make “necessary investments” in education, infrastructure, recreation, public safety and other municipal services, Mayor Allan Fung said during his annual State of the City and budget address on Monday.

“While no tax increase is ideal, we have minimized discretionary spending in order to make these much needed investments and minimize the effect on taxpayers’ pockets as best as possible,” the mayor told a crowd gathered in City Hall’s Council Chambers.

Overall, Fung’s plan for the fiscal year that begins July 1 represents an increase of approximately $8.8 million, or 3.04 percent, over the current year.

It relies on roughly $190.24 million in tax revenue and nearly $107.8 million in other revenue, including state aid.

The tax increase – which Fung said is the fifth to be sought during the 11 budget processes he has overseen as mayor – would see the residential tax rate rise 48 cents to $20.77 per $1,000 of valuation. The commercial rate would increase 72 cents to $31.16 per $1,000 of valuation.

Based on figures provided by the administration, the tax bill for a Cranston home with the median value of $213,100 would increase approximately $102 for the coming year.

In a meeting with media members ahead of his formal remarks, Fung said his budget plan for the year ahead includes few flashy items – and he contrasted it with the state budget proposal put forward by Gov. Gina Raimondo.

“My budget isn’t like the governor’s – new bells, whistles, new fees, stuff like that. It’s pretty straightforward,” he said.

Fung’s budget would provide Cranston Public Schools with just less than $95.4 million in local funding – $93,896,822 through “maintenance of effort” and $1,500,000 in an additional appropriation. The district had requested approximately $3.1 million in an additional appropriation from the city, citing decreases in state aid under the governor’s budget plan.

Fung and Finance Director Robert Strom said approximately 70 percent of the $2.9 million in additional revenue created by the tax increase would go to the city’s schools. That includes the $1.5 million in additional appropriation and $600,000 in debt service related to a recent bond issuance for work at Eden Park Elementary School, Hope Highlands Middle School and other projects, they said.

Fung also said the district’s budget plan did not include savings from the closure of Chester Barrows Elementary School at the end of the current year, which the School Committee has approved. Those savings have been estimated at approximately $400,000.

In all, Fung said his budget plan provides for nearly $21 million in capital improvements. Those include $4 million in road paving; $1.5 million in storm grade upgrades; $750,000 in sewer upgrades; funding for a new ladder truck for the Fire Department and $400,000 for fire station upgrades; new vehicles for the Department of Senior Services; $90,000 for Cranston Public Library restroom and security improvements; approximately $500,000 toward open space acquisition and restoration; and money for recreational facility improvements, including the planned athletic field project at Cranston High School West, replacement of the Doric Avenue park walking track and upgrades to the Narragansett Street tennis courts in Edgewood.

The mayor also said the budget continues “our pattern of responsibility and commitment to our pensioners, making 100 percent of our [annual required contribution, or ARC] payments for both pensions and [other post-employment benefits] obligations.”

Fung said the city has been on track to realize a modest surplus for the current fiscal year, but that picture became cloudier once Raimondo proposed a reduction of approximately $630,000 in payment in lieu of taxes, or PILOT, funding for the city. In his address, he called the cut a “ridiculous reduction” and urged residents and officials to lobby the city’s delegation to the General Assembly to restore the funding.

“For the current year’s budget, everything was trending well … That kind of throws a little monkey wrench,” he said during the meeting before the formal remarks. He also said he will likely issue an executive order regarding discretionary spending for the last three months of the current year, and noted that the city has a “healthy rainy day fund” of more than $20 million on which to fall back if needed.

The mayor’s budget includes no increase in sewer rates, which an outline provided by the administration states is “due primarily to the continued savings recognized by refunding the outstanding debt related to the lease of the facility.”

Fung said the final motor vehicle tax rate for the coming year remains “up in the air” as the General Assembly finalizes the state budget and incorporates the car tax phase-out championed by House Speaker Nicholas Mattiello (D-Dist. 15, Cranston). He said the city will hold off on sending car tax bills until the situation becomes clearer, as it did last year.

“We’re just taking the safe approach,” he said.

In his formal remarks, Fung said Cranston is “one of the best places to live in the state and our country.”

“As we take a look at what is going on in other cities and towns across our state and see that they have been struggling, I can report to all of you today that our city of Cranston continues to do exceptionally well … We know that Cranston, and its limitless potential, is the role model for the entire state. And the administration will do everything in our power to keep it that way,” he said.

Public hearings on the mayor’s budget plan begin at 9:30 a.m. on Saturday, April 6, with a special meeting of the City Council.

At 10 a.m. that morning, the council’s Finance Committee will hold a hearing on the Finance Department, information technology, community development, building inspections and senior services budget plans.

At 1 p.m., a finance hearing will focus on the budget’s allocations for the Comprehensive Community Action Program, Parks and Recreation Department, various board and commissions, City Council, canvassing office and city clerk.

After Saturday, all of the remaining hearings begin at 6:30 p.m. and will be held in City Hall’s Council Chambers. The rest of the schedule is as follows:

Wednesday, April 10: Cranston Public Library, economic development, executive, Law Department, insurance claim and risk management, personnel

Monday, April 15: Fire Department, Police Department, Municipal Court

Wednesday, April 17: Public Works Department, highway maintenance, sewer enterprise fund, Planning Department, capital budget

Wednesday, April 24: Cranston Public Schools

Monday, April 29: Budget amendments

Thursday, May 2: Budget adoption