Lancashire County Council has approved its budget for 2017/18.
As part of the budget, Full Council agreed that council tax for 2017/18 be increased by 1.99% plus a 2% increase specifically for social care services.
In an addition to the original budget, an extra £500,000 was approved for the county council's road safety budget.
County Coun. Jennifer Mein, Leader of Lancashire County Council, said: "We face an unprecedented financial challenge as a result of relentless cuts in central government funding combined with a rising demand for our services.
"We do not want to increase council tax but our dire financial situation means we have no choice. Even allowing for a 3.99% rise over the next four years we will still have a funding gap of £153m in 2020/21.
"We are working extremely hard to ensure that we can continue to provide services to the people of Lancashire, particular to the most vulnerable in our community, but the stark truth is that it is difficult to see how we can continue to do that, particularly beyond 2018/19, when we will have used up all of our reserves."