The City of Tonawanda Common Council adopted a local law which gives it permission to override the state-imposed 2 percent cap on the tax levy, if needed, for the city's 2018 budget.
The city has exceeded the tax cap for three consecutive years.
"We don't have any fluff," said Mayor Rick Davis. "If we make cuts it will affect services."
He said other municipalities tap into reserves to stay under the tax cap.
"They are not solving the problem. They are just kicking the can down the road further," he said.
Davis said that recent tax hikes approved by the council have increased the average homeowner's tax bill by $9 to $15 a year.
Treasurer Joseph Hogenkamp said the city struggles to pay for capital projects and state-mandated sewer improvements and it has not added to its tax base.