The average Fairfax City homeowner would pay $12 a year less in real estate taxes under a $17.9 million budget that City Manager George E. Hubler Jr. proposed yesterday.

Butthe savings would be more than offset for a typical homeowner by an increase in sewer rates that Hubler also proposed.

Hubler's budget, subject to approval by the City Council, calls for cutting the city's current real estate tax rate of $1.70 per $100 evaluation to $1.55 in the fiscal year beginning July 1.

Based on that lower rate, the owner of a $60,000 home, the average home in the city, would pay $12 a year less. The average assessment of homes in the city has increased by 8.3 percent this year, the same increase as recorded for the typical home in Fairfax County.

Hubler said his budget, 7.5 percent higher than the current city budget, contains no excesses and would allow the city's 257 employes a 5.5 percent pay increase, an amount in line with the president's wage guidelines.

Under the proposed budget, the city's sewer rate of $1.23 per $11000 gallons will be raised to $2.11 per 1,000 gallons because of the escallating costs of treating sewage to meet federal requirements, Hubler said.This means that the sewer bill for an average city customer who uses 20,000 gallons of water in a three-month period will be $18 higher per quarter.

The largest item in the city budget is $9.5 million for schools, of which $8.4 million is earmarked to pay for the school services Fairfax County sells to the city.