Faced with a huge tax increase, Hercules Aerospace Co. is threatening to pull out of the small recreation district that was chosen as the site of the Olympic speed-skating oval.

David Howick, director of the Oquirrh Fitness Park, which is run by the Kearns Recreation District, said the facility still would be able to operate and maintain the skating oval if Hercules pulled out - even though taxes from the aerospace company make up a large portion of the district's yearly budget.But Howick said he believes the district can keep Hercules from leaving.

In November, voters within the district approved a $5.5 million tax hike to add a gymnasium, health-screening facilities and other equipment to the center, 5624 S. 4800 West.

Hercules, which had been paying $53,000 yearly in property taxes to the district, would be paying $79,000 by 1994. Company officials said the increase is difficult to bear, particularly at a time when the company is enduring layoffs and trying to cut its expenses.

"We are the largest single property-tax payer in that district," said David Nicponski, Hercules spokesman. To pull out of the district, the company would have to legally disincorporate. Because of taxes, Hercules officials may soon consider similar actions in West Valley City, the home of part of its huge complex on the west side of the Salt Lake Valley.

To keep the aerospace company from leaving, Oquirrh officials are offering to allow Hercules employees special privileges for using the facilities.

"We're expecting to receive a proposal," Nicponski said. "We'll review it and make a determination."

Howick said he believes the proposal is an effort to compensate the company for its tax payments.

"They're supportive of our facility. They're supportive of the speed-skating oval," he said. "We're just trying to give something back."

The Oquirrh Fitness Park won the right last year to become the speed-skating venue should Utah be awarded the 2002 Winter Olympics. The center, which owns vast acres of undeveloped land, beat out Salt Lake City, which wanted to place the oval downtown, and Salt Lake County, which wanted it inside a remodeled Salt Palace.

Howick said the center's only financial responsibility to the oval during its first years will be to maintain it during warm-weather months. The oval will remain uncovered until the International Olympic Committee decides whether to award the games to Utah.

"That's only a couple of thousand dollars," he said. "We just have to water it."

He said plans call for recreational soccer leagues to play on grass inside the uncovered oval.