Frontline services will be protected but Lancaster City Council's share of Council tax will rise by the maximum allowable if budget plans get the go-ahead.
The council is also proposing to freeze fees on car parking, pest control, Salt Ayre Leisure Centre and for its market traders in 2025/26.
But it is expected to increase charges for its other services in line with inflation, and residents who pay for garden waste collection will be charged an extra £1.
The council has published its draft proposals, saying it will "deliver a balanced budget and protect essential frontline services in the next financial year".
These proposals will go before the full Lancaster City Council for a vote, before coming into effect.
The council's share of Council tax is expected to rise by 2.99 per cent (£256.63 to £264.30 per year, or just over £5 per week on a Band D property).
The full impact of the Council tax rise on local residents will not be known until all local authorities decide on their tax precept for the year - including Lancashire County Council, the police and fire authorities, and local parish councils.
The council said the balanced budget has been achieved without dipping into financial reserves, and "through sound financial management".
Councillor Tim Hamilton-Cox, cabinet member with responsibility for finance, said: “I am delighted that through the hard work of councillors and officers we have been able to put forward a balanced budget which ensures we will be able to continue to deliver essential services for residents while also investing in and improving our district.
“However, the longer-term position remains very challenging. To address the budget deficit in future years the council has embarked on an ambitious programme called Fit for the Future, with the aim of delivering a wide range of services with less resource.”
This programme includes a new online system that enables taxi drivers to submit applications electronically, eliminating the need for paper-based forms.
This has freed up busy licensing officers while streamlining the application process.
The next stage of the project will be to introduce online applications for premises licensing.
A council spokesperson said the budget plans for 2025/26 form part of their ongoing commitment to protecting vital frontline services, supporting communities, ensuring access to services for those most in need, and working in partnership to deliver the best outcomes for the community.
Lancaster City Council cabinet is run by a coalition of Green, Liberal Democrat and Morecambe Bay Independent councillors.
A spokesperson for the opposition Labour Group said they were "pleased that the administration is working toward a balanced budget".
"However, we cannot overlook the lifeline which has been extended to council finances thanks to the extension of electricity generation at Heysham 1 power station," said a Labour spokesperson.
"This is good news for our district, and a stroke of good luck for a Green-Party-led administration which otherwise has yet to show how it plans to meet the challenge of a structural deficit in long term cduncil finances. We await full details of savings and spending plans."
Lancaster City Council, which provides hundreds of services including waste collection, street cleaning, maintaining parks and playgrounds, providing CCTV and supporting arts, culture and entertainment, sets a budget every year in February.
The proposals will be considered by the council’s Budget and Performance Panel at its meeting on Wednesday January 29 at Morecambe Town Hall, starting at 6pm. Everyone is invited to attend to find out more about the proposals.
Any feedback will be considered by the council’s cabinet before the final proposals are considered by all councillors at the annual budget meeting on Wednesday February 26 at 6pm.
* The draft budget proposals can be found on the council’s website as part of the agenda for the Budget and Performance Panel on Wednesday January 29.
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