A new budget, complete with a tax increase and water rate decrease, is in place in Centerville and months of hearings, meetings, proposals and compromises have been laid to rest.

Or, maybe not.The Centerville City Council Tuesday held a public hearing and reopened the budget it just passed a month ago, a compromise document that no one on the council seemed to like but was deemed necessary because the new fiscal year was only a few days away.

Minutes after passing that budget, the council set a new public hearing and meeting, held Tuesday, to reconsider its actions.

Despite several residents voicing opposition, the council voted to increase the city's franchise tax by a percent, from 4 to 5 percent, but to cut back the recently approved hike on culinary water from $6.50 a month to $5.50.

The tax hike will give the city an additional $46,000, to be divided between street improvements and the park capital improvements funds. The decrease in water rates will cost the city about $30,000, City Administrator David Hales estimates, but projects that would have been affected can be funded from other sources, he said.

But the tax increase and water rate decrease are both subject to further change.

The council split 2-2 on the franchise tax hike, with Mayor Dean Argyle casting the tie-breaking vote in favor. Councilman Bruce Erickson was not at the meeting but is known to oppose a tax hike.

Councilman Douglas Nielson voted against the increase, saying he believes it unfairly places too much of the tax burden on one segment of the city's businesses, which are large utility users.

Council member Nancy Gibbs, who earlier supported the hike, made a last-minute switch and voted against it. She said although the city may need the money for streets and parks, the council still needs to listen to its citizens who oppose the tax.

Nielson noted, when the mayor cast the tie-breaking vote, that with the absent Erickson known to oppose a tax hike, it could come up for a new vote at a later meeting and be rescinded if Gibbs maintains her position.

The water rate decrease passed by a wider margin, 3-1, with Nielson opposing it. But the council noted earlier in the meeting that the decrease may be only temporary.

The city's water rate structure is under study, and council members said if the study recommends an increase, even if the increase is more than the one they just rolled back, they will support it.

The first budget proposed in April by the mayor and city administrator recommended doubling the city's franchise tax, from 3 to 6 percent; increasing the water rate; and applying the franchise tax to city water.

The additional revenue - estimated at $75 per year per homeowner -would have gone to finance a list of improvements put together by the mayor and council ranging from street and park projects to a new city maintenance and municipal building.

After numerous work sessions and public hearings, the franchise tax increase was pared down to 1 percent, the water rate increase was upped from $1 to $2.50 a month, and the proposal to extend the franchise tax to water use was put aside.

But those compromises still appeared unsatisfactory to the council, especially Councilman Erickson, who drew up his own alternate budget, which proposed carrying out the six-year capital improvements plan with no tax hike, only an increase in the water rates.

Erickson's budget picked up some support from Gibbs, but the rest of the council deemed his revenue projections too shaky and said it left the city with little or no reserve funds. Seeing it had no chance, Gibbs dropped her support and went with the limited franchise tax hike and increase in water rates.

"If it comes to a vote again, which it could, it may go the other way with Bruce (Erickson) here," Nielson said after Argyle's tie-breaking vote. "And I think it's very possible that it could come up again," he added.