Provo School District's proposed budget for 1988-89 has a slight increase in state funding, to support growth, but a $500,000 drop in local and federal revenues still leaves district officials with budget concerns.

However, there are no plans to raise property taxes.Lynn Smith, school district business manager, said state revenue will be up more than $200,000, bringing the total to $24.8 million. The additional money is to fund a larger student population, as the state has not given any increases to offset inflation. The weighted pupil unit - the amount given for each student - has been set at $1,204 for three years.

And while the number of students in the district continues to increase, the assessed property valuation continues to decrease, Smith said. He suggested that the decrease is partly because of delinquent tax collections. Provo School District is the second lowest in the state in percentage of property taxes collected.

The Provo Board of Education reviewed the $40.2 million budget at a special meeting Tuesday night before accepting it for final adoption later this month.

Smith said district residents would be happy to hear that property taxes will not be raised. "If property owners have the same assessed valuation on a home as last year, they will pay the same school taxes."

School Board Vice President David Weight said: "This is a critical item because we made a promise to the citizens that we would not raise the mill levy for a five-year period. It's been a painful thing to do, but we had to do it."

July 1 begins the fifth year. By not raising taxes, the board will maintain credibility with the voters, Weight said.

Part of the $500,000 decrease in revenue is from federal cuts in specially funded programs such as for the handicapped, Smith said.

The food services fund will increase $183,000 for next year. Smith said this fund should carry its own weight. "It looks like we won't need to increase prices this year," he said.

Board members also reviewed the 1987-88 budget of $40.8 million. This year's budget was $3.3 million more than the previous year, mainly because of funds for special programs and grants through state and federal agencies, Smith said.

The proposed budget for next year will be on display in Smith's office at the district administration building until June 15. District patrons may comment to the board before the budget's final adoption. The district will hold a hearing June 21.