NIAGARA FALLS – Residents and businesses in Niagara Falls will pay higher water and sewer bills next year.

The Niagara Falls Water Board on Wednesday approved a $28.8 million budget for next year that raises water and sewer rates 2.6 percent.

The board’s preliminary budget had called for a 3.5 percent rate increase, but about $103,000 in expenses were trimmed.

“It’s a responsible budget,” said Water Board Chairman Theodore W. Janese III. “Of course, we’d like it to be lower.”

The spending plan was approved by a 4-1 vote; board member Renae Kimble cast the only negative vote.

Water Board officials have cited a number of reasons for the rate increase, including rising costs of health care and retirement for its employees, debt service and property and liability insurance, as well as the end of revenue from a long-term settlement agreement with Occidental Chemical Corp.

The final $500,000 of the deal with Occidental was paid this year.

Executive Director Paul J. Drof said the board will have lost $1.8 million in revenue over the last two years, with the ending of the deal.

Overall spending at the authority is below where it was in 2009, Janese said, noting that expenses can be somewhat controlled as opposed to revenue.

However, spending next year will go up about $2.1 million, or about 8 percent.

Two residents spoke at Wednesday’s public hearing, which was held prior to the budget vote.

Kimble said she voted against the budget because she feels the rates are too high and the proposed increase is too much.

Kimble also called the spending plan “asinine” because she said it contains no funding to cover any raises for Water Board workers in the three United Steelworkers locals, whose last contract expired at the end of 2010.

Janese said such funds have been included in the budget.