The Alexandria City Council adopted a $158.2 million operating budget last night, cutting the real estate tax rate by 1 cent and adding $1.2 million to the school budget, which school officials said was greatly needed.

The council's unanimous vote reduces the tax rate to $1.38 per $100 of assessed valuation for the fiscal year that starts July 1. Rising assessments mean that most homeowners will still pay more taxes next year; the value of the typical house rose 6.4 percent.

The owner of a $126,500 "average" house will pay $1,746 in tax, $93 more than last year's tax bill on a house valued at $118,900.

Council members said they may cut the tax rate further in November if a $1.8 million emergency fund is not needed to meet federal aid cutbacks.

The budget includes $45.6 million for the city schools, $1.2 million more than City Manager Vola Lawson proposed March 20.

Lawson said $3 million in unexpected property tax and sales tax revenues allowed the city to cut the tax rate, give school officials the funds they said were needed and augment the budgets of city agencies.

"Basically, you get what you pay for," said Mayor James P. Moran Jr., explaining why Alexandria's tax rate is still higher than Fairfax's ($1.35 per $100) and Arlington's (94 cents per $100). "It will be incumbent on us to offer the highest quality of life and best schools compared with any other jurisdiction in the Washington area."

But some residents thought a 1-cent cut was not enough. "Moran is politically dead if he sits on top of the highest tax rate in Northern Virginia," said John Williams, president of the Alexandria Taxpayers' Alliance.

The budget provides for an average 5.9 percent salary increase for most of the city's 1,800 employes. The 751 schoolteachers have been promised a 7.7 percent raise by the School Board, and the additional money given to the schools last night apparently means that the raise will be implemented. Beginning teachers' salaries would rise from $18,200 to $19,601. The average teacher salary would rise from $34,000 to $36,618.

"The votes are there for the [7.7 percent] salary increase," said School Board member Timothy S. Elliott. Board Chairman Lou Cook said the board would vote on teacher salaries May 28.

The six-year, $60 million capital budget, also approved last night, includes $100,000 to begin designing the controversial Bluestone Connector, a road extension between Duke Street and Eisenhower Avenue that has prompted protests from neighbors for almost 15 years.

In a 6-to-1 vote with Democratic council member Redella Pepper dissenting, the council tentatively approved the extension, forwarding the issue to the Planning Commission for further study this September.

The council deferred voting on a second West End road extension, the Clermont Connector, until May 27.

"We're focusing on Bluestone because it's cheaper and quicker," said Lawson. She said better roads in the West End are essential for continued and needed development.

"We hope that between now and fall we can work out an alternative," said Thomas W. (Mike) Hicks, president of the Strawberry Hill Civic Association, which represents about 900 families. Hicks said that before final approval is granted on the Bluestone plan he hopes to persuade officials to block off three residential roads leading to Duke Street.