Hillsborough Town Manager Eric Peterson says his Sudafed kept him awake this week. So he went back into the office and found a way to trim a penny and a half off his recommended tax increase.

The new $7.1 million operating budget lowers the proposed tax rate increase from 5 cents to 3.5 cents. The new rate, as of Friday morning, is 67 cents per $100 of assessed property value.

An owner of a $200,000 home would pay $1,340 in town property tax, $70 more than this year, instead of the $100 more Peterson recommended to the Town Board Monday night.

That's a 5.5 percent increase, compared with the 7.9 percent increase in his original budget.

Peterson cut expenses by reducing the town's contingency fund and police patrol costs and by cutting a proposed increase to the Arts Council, among other measures.

"While no one will celebrate a 3.5-cent tax increase, considering the town's property valuation has barely increased ... this proposal does a good job mitigating a challenging situation," he said.

The Town Board will hold a public hearing on the budget at 7 p.m. May 29 at the Town Barn, 101 E. Orange St.