PAWTUCKET –– The City Council on Wednesday gave preliminary approval to an amended budget that would impose a roughly 8-percent property tax increase in the fiscal year that begins July 1, largely to close a schools deficit in the current fiscal year.

The amendment dropped a requirement that residents pay for trash bags after the public expressed strong opposition at the hearing. The bag system aimed to cut next year’s tax-rate increase to 5.6 percent by offsetting the city’s tipping fees at the state landfill, but resident after resident said the $2 per bag amounted to a tax hike in disguise.

Some residents argued that enforcement of the bag program would fail, that the program needed more study, and that it might not meet revenue projections. The bag system was slated to start in the fall.

The nine-member council must take a second vote on the amended budget next week, assuming it does not amend the plan again following a public hearing the night of the vote. The hearing will focus on the amendment that removed the bag proposal.

On a home assessed at $171,000, the median value in the city, the tax bill would increase by about $282, according to Finance Director Ronald Wunschel. The current tax rate, $16.13 per $1,000 of assessed value, would rise to $17.78 under the amended $203-million budget.

State law caps local tax levy increases in fiscal 2010 at 4.75 percent, but the state Division of Municipal Finance granted Pawtucket an exemption because of a large drop in state revenue-sharing aid. The state cut the city’s aid by $2.6 million, more than 50 percent, Wunschel said.

While the tax increase would cover $3 million of a $5.1-million schools deficit in this year’s budget, “rainy day” cash reserves would be tapped to cover both the balance of that deficit and the entire $2.6-million non-schools deficit, Wunschel said.

Council President Henry S. Kinch Jr. criticized state officials for taking aid away from communities and essentially dumping a tax burden onto local taxpayers. He also criticized school district officials for not dealing effectively with their deficit.

mmckinne@projo.com