Port Royal does not plan to raise taxes, although it will not officially set the millage rate until August, Town Manager Van Willis said.
Town Council members approved the budget on final reading Wednesday during a regular meeting.
"The only thing I hate about the budget is we don't have a cost-of-living increase for the employees," Mayor Sam Murray said. "Everybody has to tighten up this year."
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The new spending plan is about 1.75 percent higher than the $4.6-million budget for the 2010-2011 fiscal year, Willis said.
Port Royal's takeover of day-to-day operations at the 11th Street shrimp dock account for much of the increase in expenditures, along with an approximate 13 percent hike in health care costs, Willis said.
With the increase in expenses, the town began looking months ago at ways to close a projected $250,000 shortfall.
Among other measures, Port Royal will take about $100,000 from its reserves to help close the gap, Willis has said.