GROTON — Groton and Dunstable officials have reached an agreement on how much of an increase they will permit in the schools’ proposed fiscal year 2007 budget.

At previous meetings, town officials rejected a proposal by the Groton-Dunstable Regional School District for an increase of as much as 6 percent and even balked at 4 percent.

But in a meeting held earlier in March, the School Committee finally voted to adopt a budget for 2007 of $33,421,977 that represented a 4.6 percent increase over 2006.

Even with the district’s debt service removed from the equation, the adopted school operating budget came to $16,291,725 which had increases of 4.66 percent for Groton and almost 5 percent for Dunstable.

The size of the increases for cash-strapped Dunstable were deal-breakers that would have forced the town to ask its residents for an override in order to meet its district obligations.

Although Groton officials said they could cover the increases with lower-than-expected revenue projections, doing so would not be easy for them either.

“There’s still a lot to do in Groton,” said Groton Finance Committee Chairman Steven Webber.

It was with those thoughts in mind that Groton Board of Selectmen member George “Fran” Dillon, Finance Committee members Webber and Jan Cochran, and town accountant Valerie Jenkins met with Dunstable Selectman Ted Gaudette and Finance Committee member Daniel St. Jean last Wednesday.

On the table was an offer by Dunstable officials made at an earlier meeting. The offer stated that if the school budget increase were scaled back to only 4.1 percent, they would be able to cover it without the use of an override.

At the time, school officials left the meeting with the suggestion that something could be done with the district’s debt service on the middle school renovation project. By delaying payments on the loan for a year, enough money could be saved to enable them to reduce the budget and bring it within the reach of Dunstable’s request.

“I was encouraged that we were getting pretty close (to a settlement),” said Young.

Arriving at the March 29 meeting armed with new figures based on Dunstable’s suggested bottom line budget, Young said that a decrease in the district’s spending request of $123,285 would reduce the operating budget proposal to $16,168,440 an overall increase of 3.94 percent.

The new figure would mean increases in individual assessments of 3.87 percent for Groton and 4.16 percent for Dunstable.

Although Groton had made a counter proposal of reducing the operating budget to only a 2.95 percent increase, those present at Wednesday’s meeting quickly settled on Dunstable’s proposal.

“I think it’s a reasonable compromise,” said Webber. “I think this will work.”

With the agreement, fiscal officials of each town will return to their respective committees to crunch the final numbers. In Groton, the Finance Committee is scheduled to meet April 4 for a last run through and vote on recommending the town’s proposed budget for 2007, which will now include a firm school spending figure.

Although Dunstable officials expect to be able to do the same, the picture there is still not too rosy. Gaudette said despite the fact that the town may no longer need an override to cover the increase in the school budget, it would still require one for its own municipal operating budget.

Meanwhile, the School Committee is scheduled to meet on April 12 with McKinney predicting that on the agenda would be discussion of the Task Force decision regarding the new budget target. The School Committee, which is prohibited by law from changing the school budget once it has been officially adopted, can still make changes as long as it revises the bottom line downward.

Town meetings for Groton and Dunstable are scheduled for April 24 and May 8, respectively.