In this time of cash-strapped local governments, Gaffney City Council on Monday approved final reading of its 2010-2011 fiscal year budget that contains a pay raise for employees and pays for needed capital equipment.

Even more stunning, council did both without dipping into its cash reserves or raising taxes.

The $11,041,421 budget includes a 2 percent cost-of-living raise for city employees and funds $648,000 in capital equipment, including two fire trucks and two police cruisers as well as a tire changer and utility tractor for the Public Works Department.

Council members are excluded from the raises.

According to the budget, taxes are expected to generate $4,185,992 — the largest revenue producer by far. License fees and state and federal aid will bring in a combined $4.45 million.

On the expense side, the police department will gobble up nearly $3 million, while the Public Works Department will cost $2.1 million to operate.

The budget takes effect July 1.

Last year, council approved a $10.9 million budget that held the line on taxes and salaries.