Property taxes are going up in Edmonton, but not as much as was initially expected, with the increase now set at 3.4 per cent for 2016.

The original forecast projected taxes would likely rise by 4.9 per cent.

Council worked hard to whittle down that number after hearing from Edmontonians who are going through tough times, said Mayor Don Iveson.

"We heard loud and clear about the financial stress many Edmonton households and businesses are facing," Iveson said.

"I think there's been a lot of restraint shown, and I think that's consistent with what we've heard from our citizens" and what's expected from the city, he added.

The majority of the increase, 2.6 per cent, will fund core services, and takes into account population growth and inflation. The final 0.8 per cent of the hike is earmarked for LRT expansion, which the mayor said Edmontonians strongly support.

The $1.8-billion Valley LRT extension project will help the city ride out the economic downtown, Iveson said.

Money spent on LRT construction will "create a lot of jobs," the mayor said, "and that employment is going to be very important."

Iveson said council stuck to the essentials in setting the budget.

This was the first year of a three-year budget cycle, intended to give city departments more predictable funding.

A handout detailing the tax increase noted the approved budget provides Edmontonians with core services at a cost of about $6 a day for most households.

For a typical home valued at $401,000, the tax hike will cost about $76 annually.

Last week, council approved the 2016-18 utilities budget, which will see residential customers pay an extra $2.31 each month for garbage collection and an extra $1 monthly for sewers.