Mayor Joe Jenkins says his proposed budget for 1988-89 will include no hikes in taxes, utility rates or service fees but will ask for pay raises and bonuses for city employees totaling 3 percent of current salaries.

Jenkins said the city's budget crunch of the past several years has eased somewhat because of increased sales tax revenue.The mayor is scheduled to unveil Tuesday to the City Council his budget proposal for the fiscal year beginning July 1.

The council is required by law to adopt a balanced budget by June 15. During the coming weeks council members will examine and possibly revise Jenkins' proposal before adopting next year's spending plan.

Jenkins said the final budget figure will be in the same range as the past several years around $51 million. Roughly half of the total budget will go to fund the city's municipal power system.

The mayor said he will propose the council give city employees a 1 percent cost-of-living pay raise, and authorize a one-time across-the-board bonus payment of 2 percent in December.

The bonus would be funded with one-time money available to the city next year only. Because that revenue source won't be available in future years, he's reluctant to spend it on pay raises the city must continue to fund annually, Jenkins said.

"The city is in good financial shape. I think we can do this for our employees," the mayor said. "They do a great job for us, and I feel good that we're able give them a raise this year."

The proposed budget is similar to this year's with a few exceptions, Jenkins said.

The city's allocation of relatively inexpensive federal hydroelectric power has been cut, so Provo will have to replace part of that with more expensive electricity generated by coal-fired plants. The Energy Department budget likely will go up about $2 million.

No increase in electricity rates is proposed now, but residential and commercial power bills may go up as the city passes along the higher cost of power.

For the first time in several years, Provo next year will be able to significantly increase the amount it spends on capital improvements, Jenkins said. The city will spend double the $150,000 budgeted this year and will benefit from a $500,000 reimbursement from the Federal Emergency Management Agency.

"That $850,000 represents a significant increase in a budget that has been very tight," he said.

The money will fund the purchase of a new ambulance and needed street maintenance equipment and pay the city's share of runway improvements at the municipal airport.

Provo's general fund, from which operations of the city are funded, will increase by some $700,000 over this year's figure to about $11 million. Included is a proposal to hire three additional police officers next year.

Jenkins credits Provo's job creation efforts for increased tax revenue that has helped ease the budget crunches of recent years.

"Our economic development activity has paid off," he said. "Our sales tax revenues are up significantly, so we can look forward to no hikes in city fees or taxes at all this year."