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Bruce Eaton, a Danvers veteran, salutes at the start of Town Meeting last night.

DANVERS — It will soon cost you a little bit more to eat out in Danvers, as Town Meeting last night was able to stomach a 0.75 percent hike in the local option meals tax to fill a budget gap.

Combined with a recent 1.25 percent increase in the state sales and meals tax, Danvers diners will pay 7 percent on top of their tab. Danvers joins other communities like Beverly, Peabody and Salem that have also passed the tax amid cuts in state aid.

As if sniffing a piece of smelly cheese, Town Meeting raised the tax against the backdrop of a $700,000 budget shortfall. A Special Town Meeting barely voted down the meals tax in August.

The meals tax debate seemed to trigger a mood among some that town spending needed to be reined in. So even though the meals tax passed, both Precinct 8 Town Meeting member Mark Zuberek and Selectman Keith Lucy offered separate amendments to slash the school budget by $200,000 and $300,000, respectively.

Had the meals tax not passed, selectmen Chairman Mike Powers would have served up a round of budget cuts and amendments.

"What will happen is, if this Article 2 does not pass, I will order a series of amendments to the town budget," said Powers, who said he had sent a letter to Town Meeting members outlining those "Tier II" cuts. Powers drew groans when he said he preferred a trash fee because it encourages recycling.

Others, like Precinct 8 Town Meeting member Bob Ryan, said he does not like new taxes, that town spending was out of control and free cash reserves were dwindling, however, "The state took resources away from you and threw you a crumb, and it's a crumb you want to grasp."

Still others, like Precinct 5 Town Meeting member Bruce Eaton, said he does not like the idea of balancing the budget on "speculation."

Eaton said he planned to vote for the meals tax hike but said it sets a dangerous precedent.

Lucy said the shortfall came from a cut of $476,000 in circuit breaker special education funding and reductions of $237,000 in Quinn Bill funding, which rewards police who pursue higher education.

"Well, the state bailed on us to the tune of $713,000 in one year," Lucy said. However, he said the town usually underestimates its revenue, and there may be no reason to collect such a tax.

School Committee member Bill Bates defended the local option meals tax as a measure of long-awaited property tax relief.

Town Meeting agreed with Bates and passed the meals tax on a voice vote. However, no sooner had it passed than Lucy offered an amendment to the school budget to trim it by $300,000.

"If we don't start doing something now, we are going to be up against it later," he said, warning of the need for an override of Proposition 21/2 levy limits, something the town has never done.

"If our budget is cut any more, we are only talking about more cuts to personnel," said School Committee Chairman Arthur Skarmeas.

After Lucy's motion died, Zuberek offered his own amendment to cut roughly $200,000 from the schools, to do away with the full-time kindergarten program.

He does not like that grant positions paying for kindergarten teacher salaries would someday be eliminated and full-day kindergarten is not mandated. Town Meeting also rejected this motion.

It was slow going last night, because, as of 10 p.m., Town Meeting had slogged through just 12 articles of 35 in the annual meeting and five in a brief special one.

The meeting passed the $1.14 million assessment for North Shore Technical High, approved home-rule petitions for special beer and wine licenses for DiLuigi's and McKinnon's markets, and approved a bylaw to tighten rules on the storage and inspection of flammables, in light of the 2006 Danversport blast.

Town Meeting effectively shot down an outdoor smoking bylaw to restrict smoking within 25 feet of public entrances, but the meeting did recommend the town manager investigate such smoking restrictions, at the behest of Precinct 7 member John Zavaglia.

In a side note that made yesterday's long meeting a little sweeter, Moderator Pat Fraizer noted it was Town Clerk Joseph Collins' birthday, with cake provided to all by Collins' assistant, Kathleen Woytovich, and Town Manager Wayne Marquis, among others.

Selectman Bill Clark could not be at the meeting because he was recovering from a medical procedure yesterday, Fraizer said.

Staff writer Ethan Forman can be reached at 978-338-2673 or eforman@salemnews.com.

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