The town council approved a $26.2 million general operating budget for the 2010-2011 fiscal year Tuesday night.

The unanimous approval came after the council held four study sessions over the past month, combing over the spending plan line by line.

Town Manager Joe Calabrigo told the council the balanced budget is prudent but still maintains the essential services the town needs to provide.

The budget includes $26.2 million for town services plus another $1.1 million for the town's community development agency.

Calabrigo said the town estimates it will take in $27.3 million in general operating revenue and another $2.1 million from community development funds.

The $29.4 million in revenue is almost $4 million less than the $33.1 million budget the town had in 2007-2008 before the recession hit.

This year's budget also contains no pay raises for town employees and reduces the number of town staff positions from 90.75 to 89.75.

The town continues to maintain a $11 million reserve fund for emergencies and unexpected expenses.

Calabrigo said sales tax revenues are expected to rise slightly while property tax revenues are expected to drop slightly. He said the state budget deficit is also a factor. The past several years, state legislators have reduced payments to local agencies to balance their budget.

"The budget process has been overshadowed again this year by the economy," Calabrigo said.

Town council members commended town employees for maintaining high-quality services with fewer people and no raises.

Councilman Newell Arnerich noted the city of San Ramon spends twice what Danville does. He also said Danville's careful financial planning has helped it avoid the layoffs and severe cost-cutting measures other cities are enduring this month.

"This is one of the most cost-effective cities in the Bay Area," said Arnerich.  "We've asked city staff to do more work with less people and it's important to take the time to say thank you."

The council also approved a separate $6.8 million capital improvement budget. It includes preliminary work on the Veterans Memorial Building renovation as well as $2 million in street pavement maintenance.