The Alexandria City Council last night adopted a $94 million budget described as austere and cut a dime from the real estate tax rate.

Homeowners can still expect higher tax bills because increased assessments based on rising property values will more than offset the cut in the tax rate to $1.44 per $100 of assessed valuation.

The owner of a home valued at $50,000 this year can expect to pay $72 more than what he paid last year. The bill for the owner of a $75,000 home is expected to be for an extra 104.

The spending planned for the fiscal year beginning July 1 will be 6.5 percent greater than in the current year, with the largest portion of the budget going to the 11,000-student school system.

The council granted the School Board virtually its entire budget request, holding back $321,000 of the board's requested $33.3 million budget. However, the council put the board on notice that it must improve its method of accounting and delayed voting on a motion that would require for the first time the board to follow the council's method of bookkeeping and budget procedures.

An unusual and bitter argument developed in the hallways of City Hall between school board and council members after the council deleted $940,000 intended for the remodeling of two schools.

Those schools, George Washington and Francis Hammond, are centerpieces in the school system's complex consolidation plan. Under that plan, in effect for the last three years, some schools have been closed and others remodeled.

School Board President Alison May angrily told council member Robert L. Calhoun that the council has "put us on hold" regarding consolidates when it delated the remodling funds. School Superintendent John C. Bristol heatedly told Calhoun that 1,400 students next fall would begin attending George Washington, which currently can accommodate only 700 students.

Calhoun replied, as he has during similar discussions at previous council meetings that the School Board's request for funds wasn't specific enough. "I don't understand any of your numbers," he said.

Calhoun later voted to restore the funds, but warned that accounting techniques must be improved.

The council also approved a wage increase for the city's 1.668 employes of at least $750 per year, or 5 percent of their total salary, which ever is greater.

The police department was kept at its current staffing level, although the council considered cutting 10 positions.

Mayor Frank E. Mann (I) and council member Nicholas A. Colasanto (D) voted against the budget, claiming both it and the property tax rate approved are too high.

Homeowners contributed nearly 60 percent of the city's revenues but account for only 25 percent of its 119,000 population. The issue of property taxes was a major issue in the municipal elections held last week.

The decrease in the property tax rate was designed in part to compensate for the total budget increase, officials said.