City Manager Robert W. Healy and his team presented the initial draft of Cambridge’s fiscal year 2010 budget yesterday, which projected a 2 percent increase over the adjusted 2009 budget.

Healy attributed the increase, which he called the most modest in the city’s recent past, to the rising cost of salaries for city employees, pension costs, and employee health insurance.

The budget proposal includes an increase in property tax in order to make up for a $8.7 million reduction in state aid to Cambridge. The tax increase comes on the heels of a similar bump last year.

The city councillors, who will hold the first budget hearing Thursday, emphasized the importance of a budget that reflects the changing sources of revenue and costs which the city must balance during challenging economic times.

“It’s a moving target and I think from day to day, you can’t really know how you’ll be balancing the budget. We’ll probably be adopting a budget without knowing all the facts,” Councillor David P. Maher said.

Of the operating budget’s approximately $444 million available for allocation, roughly $134 million has been set aside for Cambridge’s schools in fiscal year 2010, a slight increase over last year’s expenditure on school operating costs.

Residents raised concerns about the transparency of the School Department’s budget.

“It is incomprehensible, you can’t see how money is allocated to or within schools at all. This allows for abuse of spending within the school administration as well as inequality amongst schools,” said resident Timothy K. Cutler.

Mayor E. Denise Simmons defended the school committee’s effort to improve the budget’s readability.

“[The budget] is very explicit about what it is, what it does, and where the allocations are made. It’s very difficult when people say they want a transparent budget but don’t say what that means or looks like,” she said.

The council voted to include a public comment section for the School Committee’s Monday roundtable meeting in order to try to address this concern.

—Staff writer Danella H. Debel can be reached at debel@fas.harvard.edu.