DALLAS -- Fort Worth's city manager has recommended a $412 million budget for fiscal 1995 that would boost the Texas city's already high tax rate by 8.4% to compensate for declining property appraisals and to raise employee salaries.

Under the budget that manager Bob Terrell proposed last week, the property tax rate would jump eight cents, from 95 cents to $1.03 per $100 assessed value, the highest among big Texas cities.

The increased rate would help offset lower property appraisals that fell by 4% in the past year, according to Charles Boswell, assistant city manager and fiscal services director. He attributed the decrease partly to changes in valuation methodology and continuing economic repercussions from defense industry cuts.

Further, the higher rate would generate more money to fund pay increases averaging 5% for city employees, who often receive below-market wages, Boswell said.

An additional sum of almost $9 million earned from the higher rate would go toward replacing old city vehicles, he said.

Some city officials are predicting, however, that the Fort Worth council will not approve the tax rate increase, which would be the largest since a 9% rise in fiscal 1989.

Boswell conceded that city officials may have to cut expenditures more and reduce the tax rise to get the budget approved by the Fort Worth council in September for implementation by Oct. 1, the start of the fiscal year.

"There is a lot of negative reaction," Boswell said. "There could be additional expenditure reductions."

With the exception of the wage increases and the vehicle replacements, he said, the budget holds the line in most services.

The $412 million proposed budget for fiscal 1995 shows a 6.2% increase over this fiscal year. The money would come from pending increases in garbage collection and water rate fees as well as the property tax increase. City officials also hope to hold down expenses with a modest capital program for Fort Worth, which is beginning to recover from economic problems stemming from large defense industry cutbacks and energy industry slumps.

"The council has adopted an informal policy that we will strive to retire more debt than we will issue in the foreseeable future," Boswell said. "We issued all this debt in the early to mid-1980s, but the assessed value started decreasing and we found ourselves strapped with a high percentage of our budget going for debt service."

To cope, Boswell Said, the city will issue only limited amounts of bonds this year. More than $10 million of general obligation bonds is expected to be sold during the fiscal year to continue the city's four-year street program approved by voters last year.

The city's general obligation bonds are rated double-A by Standard & Poor's Corp., Moody's Investors Service, and Fitch Investors Service.

In addition to the GO debt, a $30 million to $50 million revenue bond issue is expected to be sold in late fall to upgrade water and wastewater treatment facilities, Boswell said. It would be part of a more than $100 million program over the next several years to bring operations in compliance with Environmental Protection Agency standards.

Chris Evangel, a Moody's vice president and supervisor of the Southwest Region, and Orlie Prince, a Moody's analyst, said the city was addressing some of its problems by aggressively paying debt and replacing equipment.

Other pressures could also be alleviated. "They don't expect any further reductions in property assessment," Evangel said.

Fort Worth is proposing a fiscal 1996 budget that calls for $422.6 million in spending, or a 2.6% increase from fiscal 1995. An additional tax rate increase is not recommended.

The concurrent fiscal 1995 and fiscal 1996 budget proposals are part of a new two-year cycle adopted by Fort Worth this year. Evangel said the move was designed to remove the budget from the political process because most council members come up for election next year.

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