Falls Church Manager Harry E. Wells this week recommended an $11.5 million city budget for the coming fiscal year, which would cost the average homeowner $65 more in property taxes than last year and would increase water bills by $14 a year.

The proposal was presented to the City Council Monday night.

With the exception of a proposal to eliminate eight teaching postitions, Wells said the proposed budget is virtually unchanged from the current budget of $10.9 million. The proposed $600,000 increase, Wells said, provides for no increases in city services but is the result of inflation.

Unlike other jurisdictions where news of Reagan administration cutbacks in federal aids to cities have sent some city financial experts scurrying back to their accounting ledgers, Wells waxed phlegmatic about reductions in federal funding. Currently, federal funds account for only 2 percent of the city budget.

The proposed school board budget of $5.1 million, which accounts for nearly half of all city expenditures for next year, includes a plan to layoff eight teachers. Douglas Scoot, executive assistant to the school superintendent, attributed that proposal to decling enrollment in Falls Church, which now has 1,100 students. School officials estimate enrollment next fall will drop to 1,040. Most of the 8.4 percent increase provided for schools in Well's proposal, Scott said, would cover salary increases of 9.1 percent, the same increase proposal for other city employes.

Even though the property tax rate would be decreased five cents, to $1.06 on each $100 of assessed value, Wells said the expected $65 increase in property taxes for the average homeowner would result from assessment increases averaging 12 percent.

The $14 increase in water bills, Wells added, is the result of an unexpected rise in water costs.

Public hearings on the proposed budget will be April 13 and May 11 at 8 p.m. in Council Chambers, 300 Park Ave.