CALAIS, Maine — The City Council has reached a tentative agreement on capital budget cuts in order to free up more money for schools, setting the stage for it to adopt its third proposed school budget next week.

The council, meeting in a special session Tuesday evening, agreed to hold a referendum on the school budget to coincide with the Nov. 5 election. The referendum will include two added questions to assess whether voters are satisfied with the amount of local funds appropriated for schools and the city’s mill rate.

The council endorsed recommendations by City Manager Diane Barnes to reduce capital spending in the current budget by $156,300 in order to allocate more funds for schools and also $9,000 from the city’s unassigned fund balance for a total of $165,300.

If the council finalizes those plans at its regular meeting Oct. 10, it would vote to approve a proposed school budget of $8,612,735. That figure, which includes $573,900 in local funds, is about $300,000 more than the proposed school budget that voters rejected in an August referendum.

The School Committee still is faced with the prospect of trimming spending by about $263,415. It has been considering recommendations by Superintendent Keith Laser that include furlough days, eliminating a handful of full- and part-time positions, and dropping co-curricular and extracurricular activities. The committee likely would vote on cuts at a regular meeting tentatively set for Oct. 15.

The capital budget reductions tentatively approved Tuesday included several items proposed last week by councilors Alan Dwelley and Chris Bernardini. The two largest items are resurfacing tennis courts, $40,000, and playground equipment, $30,000. The list submitted by Barnes also included eliminating $15,000 for riprap for a walkway, $10,000 toward a fire truck, and $10,000 for a retaining wall at the transfer station. Other cuts were for lesser amounts.

“It’s infrastructure,” Councilor Billy Howard said to a gathering of about 65 people at Washington County Community College, where the special session was held. “In the corporate world, they’d do away with staff.”

The capital spending reductions include projects “we really need to do,” said Dwelley.

“The onus is going to be on the school going forward,” added Dwelley.

Councilor Art Mingo said he was “not really happy” with the capital spending cuts. “This has got to be a one year deal,” he warned. “It can’t happen again.”

Barnes called the proposals a “stop gap measure.”

“It’s not going to be there next year,” she warned.

Barnes also briefly summarized how the city has dealt with declining state revenue sharing funds and taxes in recent years. To offset those lost revenues the city administration tightened its fiscal belt by refinancing debt, launching a recycling program to reduce tipping fees, saving money by putting insurance coverage out to bid, tightening its health insurance plan for employees, and skipping cost of living raises for staff, she said.

Mayor Marianne Moore thanked Barnes and the city’s department heads for “really digging deep.”

The City Council in recent weeks also freed up $90,000 for schools, money that was earmarked for textbooks and maintenance. It also eliminated two other capital projects, $20,000 for a new garage and $20,000 for an addition to the public safety building, and reduced its equipment reserve by $10,000 in order to allocate more funds for the school system.

It voted in early September to approve a proposed school budget of $8,390,000 and set a referendum later that month but subsequently rescinded those decisions.

Calais voters twice have rejected the proposed school budget endorsed by the City Council. Most recently, they voted down a proposed $8.3 million school budget in August that increased local spending for schools by $251,000. The School Committee had requested $8.8 million.

The City Council increased the mill rate earlier this year with about 85 percent of the additional revenue going for schools.