The city was able to lower the projected increase in the property tax levy to 5.3 percent from a projected 6.5 percent — still an increase of 1.75 percent from the current fiscal year, but an impressively small one, said finance committee chairwoman Marjorie Decker at Monday’s meeting of the City Council.

That amounts to 32 cents more for every $1,000 of property value for residents, to $8.48, and 86 cents more for every $1,000 of property value for businesses, to $20.76. Those business and commercial properties — with the standard exemption for the city’s universities and other nontaxable institutions — account for 65.4 percent of the tax base, with residents accounting for 34.6 percent.

As predicted in the spring, there will be no increase in water and sewer rates.

“This year’s increase is very modest for a budget of nearly a half-billion dollars,” Decker said, especially considering that state aid has dropped $10 million, or 29 percent, over the past two years.

This year continues a trend over the past seven years that has seen 73 percent of residents’ property tax decrease, stay the same or rise less than $100, she said, although the figure when looking just at this year is lower: 64 percent.

The Cambridge Civic Journal has a further breakdown, including a table showing changes in median home prices — a 7 percent hike for single-family homes averaged across all of Cambridge; 4.4 percent for a condominium; 4.9 percent for a two-family home; and 5 percent for a three-family home.

Cambridge’s tax rate remains the lowest of all the 351 communities in Massachusetts, City Manager Robert W. Healy said in comments immediately after Decker’s introduction to a special midmeeting hearing on the tax rate. He also pointed out some related good news:

“Contrary to elsewhere in the commonwealth and and many places in the nation,” Healy said, property in Cambridge is “not only holding its value, but seeing a slight increase.”

“It’s impressive to be able to have a budget with this level of service,” he said. The 1.8 percent increase was made possible in part by zero percent increases in the salaries of city employees, but their contracts don’t include another year without an increase; rather, a 2.5 percent increase is expected, which is why Louis Depasquale, assistant city manager for fiscal affairs, projected a 7 percent increase for the next budget, fiscal year 2013.

“We always come in lower than our projections,” Healy said.

Another factor helping the tax rate was new construction, estimated to have lowered the rate by up to 48 percent of what it could have been — a figure mentioned by the hearing’s sole voice during public comment, council candidate Charles Marquardt.

Some $11 million has been paid out from free cash reserves as a result of a lawsuit against the city filed by former employee Malvina Monteiro, but free cash is at $100.2 million, the “highest free cash balance in the history of the city,” Healy said. He did not specify if that superlative was adjusted for inflation. The city faces two more potential payouts in lawsuits similar to Monteiro’s.

Starting Oct. 3, residents can pay their taxes online, Decker noted.

One member of the public, Jack Welch of Auburn Street, complained earlier that the city was assessing a “convenience fee” for those taking advantage of online filing, which could be the second fee for payment by card after one charged by the payer’s bank.

The council also took a series of unanimous budget-related votes, seen on the city manager’s agenda for the evening, to allow the state Department of Revenue to formally set the rates.