Orkney Islands Council has raised ferry fares by 3% as it faces reduced funding.
The council had requested £6.8m, but was awarded £5.3 million.
Council leader James Stockan said: “This is a considerable disappointment for us and leaves the council in a very difficult position.
“We were left with little option but to increase Orkney ferry fares by 3% for the year ahead.
“The amount we requested would have covered the full running costs of the inter-island ferry service over the next 12 months.
“It was a decision taken with a heavy heart, because we are all too aware that our fares are among the highest in Scotland and that this will be a burden for already vulnerable communities.”
In setting next year’s budget, councillors agreed that £83.7 million should be spent on running council services over the next 12 months.
They also agreed to draw down £6.1 million from the council’s reserves, a figure an OIC spokesman described as ‘considerably higher than the usual contribution and unsustainable if it was to continue year after year’.
A savings target of £350,000 for the next financial year was also agreed.
Council bosses said it can be achieved without the need to reduce the council’s workforce.
Councillors also agreed to raise council tax by 4.79%, giving an increase in Band D from £1,100 to £1,153.
Existing fees and charges for council services will also increase by at least 3% from April 1, apart from fees for planning applications and building warrants, licensing, trade waste collections, and social care charges that are set by legislation.
Charges will be introduced for electric vehicle charging, replacement refuse bins, collecting and kennelling stray dogs, planning permission amendments, and caravans, motor homes and tents using car parks and other council land.