If approved by full council next month Band A properties, which make up nearly two thirds of homes in Sunderland, will pay an extra 72p a week.
For council services, the benchmark Band D bill would increase annually by £56.41 – from £1,413.68 to £1,470.09.
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The rise comes as council bosses look to save around £3.2 million in 2020/21, with more cuts expected in future years.
Proposals include a 1.99% rise in base council tax with a further 2% added on under a government levy to tackle pressures in adult social care.
A typical Band A property would contribute around £85.63 annually towards this care precept.
Cabinet Secretary, Coun Paul Stewart, speaking at Tuesday’s cabinet meeting, said council tax increases were in line with government expectations.
“Raising council tax is one of those difficult decisions, if we don’t raise it we will need to cut services further and reduce our investment into key priority areas,” he said.
“That would mean cuts in services to those most vulnerable in our communities and to the services which residents tell us are a high priority.
“In this financial settlement, the government assumed that all councils will raise their council tax by the maximum permitted level, in our case that is 3.99%.
“You will hear the government say that they’re increasing funding to local government but unfortunately more than 40% of this so called increase to this council will be raised locally through council tax increases.”
Cabinet member for Communities and Culture, Coun John Kelly, added that council tax supports key services such as adult social care, children’s services, the environment and more.
“We need to get back to telling people where their council tax goes so they can see it’s not just on frivolous things,” he said.
“It’s core elements of what we do here in this city and looking after the most vulnerable.”
The council tax rise is part of the council’s 2020/21 revenue budget which sets out plans for day to day spending on services.
Key announcements have included cutting the council’s bulky waste collection charge from £22.50 to £10 and investment into environmental health, housing enforcement, city ‘deep cleans’ and tackling antisocial behaviour.
A £1million carbon reduction fund will also be launched to help meet the council’s target of becoming ‘carbon-neutral’ by 2030 alongside plans to cut councillors’ allowances by £140,000.
At the cabinet meeting, councillors spoke out about government grant reductions over the years, which have seen spending powers reduce by a third since 2010.
Concerns were also raised about the future of finance for councils, including the ongoing ‘fair funding’ review which will affect how cash is allocated and distributed to local government.
Council leader, Coun Graeme Miller, added the council could lose out under the formula to the sum of £6.5million a year.
He said: “We will do what we have to do as a council to ensure that we have the revenue we require to deliver the services that our residents need and ask us for.
“We will take what government gives us regardless. Once again it comes down to us controlling what we do in this city.
“I think this document (revenue budget) clearly shows the council knows what it’s doing and is doing what it can in the best possible way.”
The final 2020/21 revenue budget and council tax changes will be discussed at the final budget meeting on Wednesday, March 4.
Expected annual council tax bills per property band for 2020/21 (Northumbria Police and provisional Tyne and Wear Fire and Rescue service precepts added for final total*)
Band A – £980.06 (£1,127.37)*
Band B – £1,143.40 (£1,315.27)*
Band C – £1,306.74 (£1,503.16)*
Band D – £1,470.09 (££1,691.06)*
Band E – £1,796.78 (£2,066.85)*
Band F – £2,123.46 (£2,442.64)*
Band G – £2,450.15 (£2,818.43)*
Band H – £2,940.18 (£3,382.12)*