The average homeowner in Fairfax City would pay about $21 more in real estate taxes under a budget proposed by city Manager George E. Hubler Jr.

The proposal, which has been sent to the City Council, would lower the tax rate by 5 cents -- from $1.40 to $1.35 per $100 of assessed value -- but an estimated 9 percent average increase in property values would result in a tax increase for most homeowners.

Hubler's proposal calls for a 9.5 percent increase in the city's operating budget, from almost $18 million in fiscal 1980 to $19.6 million in fiscal 1981, which begins July 1. In neighboring Fairfax County, the budget being considered by the Board of Supervisors calls for an increase of 16.1 percent. c

The main difference is that the county included a 20.7 percent increase in school expenditures -- the biggest item in both budgets -- while in Fairfax City, Hubler estimated school costs will decrease by 2.7 percent.

A city spokesman said the decrease was due, in part, to overestimation of instructional cost for this year. Another factor, he said, was the continuing decline in enrollment -- from nearly 3,700 students to 3,389.

Among the other important aspects of the budget, which goes to public hearings March 18 and April 1 with final action by the council due April 15:

An 8.5 percent cost-of-living raise for city employes -- the same amount proposed for school and county employes in Fairfax County.

An addition of four officers to the 58-member police force.

Continuation of the Fairfax City Express Bus, with a subsidy level of $189,880. Use has increased from 660 to 912 round-trips a day.

Earmarking of $300,000 as a potential payment for Metro operating deficits and another $300,000 for Metro revenue bonds.

The capital budget, amounting to $650,000, would be paid entirely through federal revenue-sharing funds. The main items are new sidewalks on parts of University Drive, Rte. 50, Rte. 237 and West Drive, and $110,000 for the city share for the Page Avenue connector to relieve traffic problems near the county governmental center in the city.