Plano school officials said this week that they expect to raise taxes again and that they'll have to use reserve funds to balance the budget for the second year in a row.

School officials said they project a $14.6 million deficit unless they cut something from the $492 million now planned for the 2008-09 school year. Last year, school trustees approved a $485 million budget and had a $14.7 million deficit, which was also covered by reserve funds.

The budget includes a 3 percent pay hike for teachers, librarians and nurses. Administrators would get a 2.5 percent salary increase. Both groups got a raise last year.

District officials say that this year's increase will cost about $9 million but that it's worth it to retain good teachers who are being courted by other districts.

"We try to keep them moving forward. There aren't too many districts that freeze salaries," said Richard Matkin, associate superintendent for business services.

"It's a very competitive market out there."

School officials also blame changes in state funding formulas and rising fuel costs for much of the spending strain.

The board is scheduled to vote on the budget June 17. A public hearing is scheduled the same day for residents to give trustees their views.

Under the plan, the district is planning to raise its total tax rate by 3.5 cents. The tax rate would go from $1.2684 per $100 of assessed property value to $1.3034 per $100 of assessed property value. Under that proposal, the homeowner of a $262,500 home – the district's market average based on preliminary tax rolls – would pay $3,421 in taxes, up from $3,330.

Two years ago, the Texas Legislature cut property taxes by a third and gave school districts the option of raising their tax rate by up to 4 cents. If a school district wants to raise its tax rate above that ceiling, it can do so only if voters approve such a measure.

"Every school district is now faced with this," Mr. Matkin said. "I would predict a majority of districts will have a deficit budget. It's the only way to keep up with inflation and give teachers pay increases."

Mr. Matkin said the district is also facing rising costs to for fuel and utilities.

Under salary increases planned for the next school year, teachers would receive about $1,480 more a year. The starting salary for a teacher with a bachelor's degree would be $44,250, while the starting salary for a teacher with a master's degree would be $46,250.

Board president Duncan Webb said the district has tried to make cuts where it can during the 10 years he has served on the board. But he is concerned about the district's future financial condition.

The school district plans to cut budgets for travel, athletics supplies and library services. It will also delay software purchases and eliminate eight portable classrooms.

"Either we're going to have to make additional cuts or we're going to have to increase the student-teacher ratio," Mr. Webb said.

"It's not a good situation. There's no good option and it's a shame that the state has put us in this situation."