Falls Church City Manager Anthony H. Griffin has proposed a 3-cent increase in the city's real estate tax rate to fund a $16 million city budget for fiscal 1986.

The proposed $16,039,269 budget represents a $1.5 million increase over last year and would increase the city's real estate tax rate from 98 cents to $1.01 per $100 assessed valuation. This would raise taxes for the owner of a $120,400 detached single-family house by about $87, according to City Assessor William De Lanoy.

Last year, that same house was assessed at $115,200 and the owner paid a tax of about $1,129, De Lanoy said. If the proposed tax rate increase is adopted, the home owner will pay about $1,216, which takes into account a 4.5 percent increase in assessed real estate value, he said.

The City Council will adopt the budget late next month, and Mayor Carol DeLong, who heads the council, said after Monday night's meeting, "We'll go over it with a fine-tooth comb."

She said it was too early to tell about the proposed tax boost but added, "We'll try to avoid it."

Last year, the council turned down a 7-cent real estate tax increase recommended by Griffin and adopted a 2-cent increase.

In his budget message to the council Monday night, Griffin called his proposal "reasonable" and "responsible."

He said he is advocating the tax increase to finance major capital projects, including improvements to West Broad Street and land acquisition for city parks.

Griffin's proposal must take into account a larger school budget this year. By Virginia law, the school's budget request must be incorporated into the city budget unchanged, and the combined fiscal plan must be forwarded to the City Council.

This year, the School Board is asking for $5.1 million, which represents about a 10.9 percent increase over what the city paid toward the school budget last year, school officials said.

According to Falls Church public schools business manager Wayne Moore, the school system recently adopted a $6.6 million operating budget, an 8.6 percent overall increase compared with a year ago. He said that budget includes a 4 percent cost-of-living raise for the city's approximately 85 teachers and a $3,800 raise for School Superintendent Warren Pace, which brings his salary to $60,000.

Moore said the budget will fund an additional 5 percent pay differential for certain hourly noninstructional personnel and the addition of one full-time and at least three part-time teaching positions.

Griffin's proposed city budget calls for a 4 percent pay raise for all city employes, which approximates the increase in the federal consumer price index for the past year, according to Falls Church Director of Finance Halsey Green. Last year, city employes were granted a 5 percent raise, which represented the first time in at least 10 years that the raise was not below the consumer price index, he said.

Public hearings on the budget will be held March 25, April 8 and April 22.