Council tax bills in the Vale are set to go up by 5.5% under draft budget proposals for next year.
The leader of Vale of Glamorgan Council says a "better than expected" settlement with the Welsh Government will mean a real-terms increase in funding "for the first time in a long while".
But Lis Burnett warned the local authority was still facing financial challenges.
The draft budget, which stands at £354 million, will be considered by the council's cabinet next week before a public consultation is due to start - with final decisions expected in March.
The council says around 70% of the budget is spent on social care and education, with costs rising sharply in recent years in order to deal with increased demand for social care and more children with ALN (additional learning needs) requiring specialist education.
Reduced real-terms funding, rising inflation and interest rates have also added to the council's task of balancing demands to allocate money across local services.
But the council says the picture in the Vale is now "brighter than it has been for some time" after receiving more cash than expected from the Senedd, along with new methods of delivering services.
Cllr Burnett said: "I’m pleased to say that for the first time in a long while our funding has increased in real teams compared to last year."
"That is not to say that recent financial challenges are behind us. The council still has significant costs to meet brought on by more than 10 years of below inflation funding."
“However, a welcome funding announcement from (the) Welsh Government and hard work from staff to transform the way services are delivered in many areas means we are in a healthier position than we might have been."
"This council does not want to make cuts, there are services in the Vale that urgently need more investment. After an extended period of significant savings and cutbacks, I’m optimistic we can now provide that and start moving forwards."
"That means focusing on the priorities set out in our five-year-plan. We want to create great places to live work and visit, protect our natural environment and give our children the best start by supporting their health, social and educational development."
"We want to provide the best possible care to vulnerable residents and perform to our maximum by constantly reviewing and improving how services operate. I know that these ambitions are shared by our residents because they have told us so."
Cllr Burnett added the proposed council tax rise in the draft budget was "modest by national standards" and would help address their prioirities.
The 5.5% hike would equate to an extra £1.75 a week for a property halfway along the banding scale in category D.
Across Wales, the average increase is expected to be 7.2% in 2026-27 - which, according to the council, means bills in the Vale of Glamorgan will remain cheaper than most of the country.
Cllr Burnett added: "Of course, a greater rise would help achieve more as money gathered from council tax directly affects what we are able to do."
"One of the questions within the consultation asks whether residents would be willing to pay more council tax to see improvements to the likes of rural transport links, youth provision and open spaces. I’m very interested to hear feedback on that."
Apart from its key priorities, the council has also stressed advanced plans for the upgrade of facilities including Barry Town Hall and Library and the Penarth Pier, along with improvements to street lighting.
A council spokesperson added: "Last year, the council made around £7 million worth of savings to stay within budget."
"Rather than traditional cuts, more than two thirds of these were achieved through the reshaping programme, a strand of work that reduces spending by operating services differently."
The draft budget will also be considered by a joint scrutiny committee and again by the cabinet before final decisions are made at a full council meeting in March.
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