Bountiful could set a trend this year by granting city employees a 3 percent cost-of-living increase, but City Council members say any pay increase will have to come through increased efficiency and productivity, not a tax or service rate increase.

Council members refused to commit the city to the increase but agreed to consider a budget proposal including a pay raise if the other conditions are met.City Manager Tom Hardy asked for permission to develop a budget that would include a 2 percent pay increase effective July 1 and an additional 2 percent increase on Jan. 1. The net effect would be a 3 percent increase for the coming fiscal year, which runs from July 1, 1988, to June 30, 1989.

Hardy said department heads and the city's employee committee support the plan. He said employees recognize that there is no guarantee, only that an effort will be made to find the money without a tax increase.

Hardy told the council that the city expects higher property tax revenues next year due to modest city growth and a return of some property to the tax rolls from the city's redevelopment agency. Sales tax revenues are also expected to increase due to commercial growth and the reworking of the sales tax distribution system by the state. This year's sales tax revenues are running about 2.3 percent ahead of last year.

In preparing the new budget, Hardy said department heads are honoring the council's mandate that no tax increases be considered. He said only the sewer rate and the landfill fee will go up. The former is due to the South Davis Sewer District increasing its fee to cover the cost of plant improvements required by the federal government. The landfill fee will rise 50 cents per month because of federal requirements for increased environmental protection at the landfill.

Police Chief Larry Higgins said department heads are committed to finding financing the pay increase without a tax increase."We've worked hard to find ways to be frugal while still maintaining high service levels," Higgins said.

Mayor Dean S. Stahle said the council is adamant about taxes and that cities should decrease them if possible. He said government needs to realize it has the same economic restraints as businesses. "Government should not ask more than what is reasonable to provide necessary services," the mayor said.

Council members were careful not to approve the pay raise before the budget process begins.They said Hardy and the department heads could prepare one with the pay increase, then present it and let the council take over from there.