Morrisville Mayor Jackie Holcombe thanked town staff for delivering a balanced budget with no tax increases and a strong reserve balance.

But Holcombe reminded the council members that needs still exist to maintain the quality of life in town and tax hikes may be necessary in future budgets.

"I think this is a good one-year budget," she said at the council's Tuesday meeting. "I don't think it is sustainable. We've heard from people who want to see more sidewalks. We heard from people who want to see more progress on the town (center).

"I think this will get us through the next 12 months, but we need to take a longer view of the financial picture."

The town center plan calls for creating a Main Street anchored by retail businesses, a civic or cultural center, and a network of greenways and sidewalks.

Two years from now, the town is expected to finance about $1.5 million to repair about three miles of roads. The staff has warned the council in past meetings that they will not be able to maintain current levels of service in fiscal year 2013 or meet its infrastructure needs without more revenue.

Morrisville's reserves could fall below the desired range - 25 percent to 45 percent of the town budget - by 2014 if money is needed to fill future budget gaps.

For now, Morrisville's tax rate will remain at $366.50 per $100,000 in property value under the spending plan that took effect Friday.

The town's budget is a $1.2 million increase from the previous year. The increase accounts for some vehicle fleet purchases. Employees are eligible to get a 2.2 percent to 6.2 percent merit-based salary increase, which will cost the town about $317,000.

A large chunk of money - $903,860 - needed to balance the budget came from the capital and infrastructure reserves, where the town had set money aside for future projects and put unused dollars from a street and public safety project.

To make sure revenues and expenses matched for 2012, the town cut staff from 154 positions to 150, which included one layoff. The staff cuts saved the town about $272,000.

The hiring of three additional firefighters has been delayed, as did the implementation of a new staffing model and fire truck purchase that is expected to save the town money in the long run.