Shrewsbury Town Council has agreed to raise its share of council tax by 3.99 per cent.
The rise was part of the 2017/18 budget approved by councillors and equates to an extra £1.59 per year on a Band D property.
The town council has been running the youth service, now renamed Young Shrewsbury, for more than 18 months.
It comes after funding for youth services was first cut and then halted completely by Shropshire Council in 2015, and the unitary authority instead agreed to provide funding for other organisations to run youth services.
Controversial proposals to cut funding for youth grants – which would have seen Shrewsbury miss out on £40,000 and Oswestry, Whitchurch, Market Drayton and Rea Valley also lose funding – were put on hold shortly before Christmas.
By increasing the council tax for households across Shrewsbury by a small amount, the town council has suggested it will be able to make up a shortfall in funding.
Town council leader Alan Mosley, who represents the Castlefields and Ditherington ward, said: "This is a good budget. It is, as I have referred to previously, a budget that shows continuing progress in making Shrewsbury a better place to live, work and visit.
"We are a council punching above our weight to ensure more and better amenities are provided for all.
"The 3.99 per cent increase in the council tax precept is to be ring fenced for the development of youth services.
"This provides significant and important services to encourage the engagement we have with the young people of Shrewsbury. Now it is faced with significant uncertainty for funding from Shropshire Council, so we must make these funds available to them to continue this vital work.
"We believe Shrewsbury residents will concur with the decision to raise this money and spend it how we are proposing. The extent of the extra expenditure is something like between two and three pence per week. It is a small price to pay."
The budget was approved unanimously during a meeting at the Guildhall on Monday.
Councillor Miles Kenny said the rise was miniscule in comparison to the benefits of the service.
He said: "I think you have to consider over the past few years there has been no increase to the precept yet tremendous amounts achieved.
"It is only an increase of £1.59 for a Band D property for a year. It is so small.
"That is miniscule with what it will help deliver. The youth services are so important to this town."