LEICESTERSHIRE Police Authority is to raise its precept for 2012/13.
The authority turned down the £1.6m incentive to freeze its share of the bill, claiming a 2.5 per cent rise in tax is needed to keep more officers on the streets.
The authority made the decision on Tuesday after consulting residents online and at public meetings.
Chairman of Leicestershire Police Authority and Rutland county councillor Barrie Roper (Con) said: “This was a tough decision. We are aware that people are facing really difficult financial challenges at the moment, which is why we gave the Government’s offer of a grant serious consideration.
“We felt that the grant would be a very costly windfall.”
Police say taking the grant would mean losing 230 officers by March 2015. However, increasing the precept by 2.5 per cent would mean the loss of 140 officers.
Coun Roper said if the precept did not rise slightly this year it could rise dramatically in years to come.
He added: “I’m aware that this is the last time we shall set a police budget and it would have been simple just to take the money now and leave the problems arising from that decision to someone else.
“However, our job is to make the right decision, not the easy decision and that is what we believe we have done.”
The budget for policing in Leicester, Leicestershire and Rutland in 2012/13 has been set at £169.6m.
The force is getting £4.15m less in Government funding than last year and its total budget is £5m less than the previous financial year. One third of the police budget is raised by council tax.
The police raise £500,000 for every one per cent increase in the precept.
The 2.5 per cent increase means homeowners living in a Band D property would pay an extra £4.24 a year, taking the annual amount to £173.87.
The police authority says if it took the one-off grant from the Government the number of police officers in the force could be reduced from 2,144 in March 2012 to 1,914 in March 2015.
By increasing the precept it estimates the number of police officers in March 2015 will be 2,004.
Leicestershire Fire and Rescue Service has decided to freeze its council tax precept this year. Homeowners in a band D property will continue to pay £53.38 a year.
Rutland County Council is due to decide whether it will freeze its council tax this year at a meeting in Catmose, Oakham, at 7pm on Monday.