New London — After months of controversy over the proposed 2012-13 budget, including layoff notices sent to about 50 employees, the city now has a spending plan in place that saves nearly all the positions and raises the tax rate by just under 2 mills.

The City Council Monday unanimously overrode the mayor's veto of the $42.3 million general government budget, in effect maintaining the 7.5 percent increase in taxes that the council approved a month ago. The tax rate will increase 1.91 mills from 25.31 to 27.22 mills. (Editor's note: This corrects the increase stated in an earlier version of this story.)

"This is a watershed moment for the city that we just adopted a budget,'' Council President Michael Passero said. "It's been a long journey to get here and, in the end, everyone needs to be proud that we got here."

He called the budget a "compromise,'' which apparently was discussed during a Democratic caucus Monday night away from public view. There was little discussion Tuesday during the 20-minute special meeting.

"It's a product of collaboration and building consensus," Passero said. "Everyone put aside their personal interests to move the city forward. ... It's a trade-off between people who thought we should raise taxes significantly and those who think we raised taxes too high already."

While the override was unanimous, the council split on motions to move money around within the budget to save the jobs of five employees that Mayor Daryl Justin Finizio had hired since becoming mayor in December.

The council voted 5-2 to transfer $429,000, mostly from the fire department budget, to other departments to fund the positions of deputy police chief, assistant city clerk, director of development and planning, the mayor's office administrator and the director of risk management.

Those positions had been eliminated by the council after the mayor announced public safety layoffs.

Councilors John Maynard and Marie Friess-McSparran voted against the transfers. After the meeting they said they would rather have decreased the budget by about $400,000 rather than reinstate the five positions.

"We could have reduced the budget by that amount,'' Friess-McSparran said. "I think the taxpayers sitting on the edge would have appreciated that."

Last week, Finizio announced that concessions had been reached with the fire and police unions to save the jobs of 25 firefighters and 10 police officers.

It was not clear Tuesday night whether the budget includes funding for four employees in the building inspection department, three in public works, two in information technology and one in the recreation department who have been notified that they will not have jobs as of June 30.

After the meeting, Councilor Wade Hyslop, who has been in favor of increasing taxes to maintain services, said there had been ongoing discussions prior to Tuesday's meeting.

"It made each of us comfortable to do what we did,'' he said.

He added that during the five years he's been on the council, this is the first year taxes have increased.

Finizio, who did not attend the meeting, said through his executive assistant Zak Leavy, "I'm grateful the council and the administration would reach an amiable resolution to move the city forward."

Councilor Adam Sprecace, the lone Republican, was the only councilor, other than Passero, to speak during the meeting.

"This meeting is moving fast,'' he said, speaking to the television camera in council chambers. "For the people in the public who are following this, what we're doing is putting us in the position where we were four weeks ago when we passed the first budget resolution."

He said the council had a workable budget then, and still does now.

"This brings us back to where we were before the layoff notices were made,'' Sprecace said, adding that he voted for the override and for the transfer of funds on the "word of the administration'' that savings will come from negotiations with the police and fire unions.

The administration announced Tuesday night that it had reached an agreement with the police union which would save the city $500,000 to $1 million in projected overtime savings.

The fire union is expected to vote Thursday on a concessions deal, the details of which have not been made public.

Finizio had proposed an $87 million budget for 2012-13, which would have required a 20 percent increase in taxes. The council spent weeks whittling that down to an $83 million proposal, which maintained staffing levels.

Finizio then announced the public safety layoffs after a public hearing on the budget but before the council gave its final approval. In response, the council eliminated the five city hall jobs in order to save the public safety positions.

After the meeting, Passero shook hands with all the councilors and thanked them for their work.

Finizio did not alter the $40.5 million school budget, which in effect means it is approved. More than 65 members of the school department have been put on notice that they their positions may be eliminated. The Board of Education has not yet acted on those proposed cuts. Taxpayers now have the opportunity to petition for a referendum on the budget.

k.edgecomb@theday.com