Arts supporters turned out in full force yesterday afternoon for a three-hour hearing to defend the proposed budget increase for the D.C. Commission on the Arts.

In a year when teachers and policemen are being laid off in the city's financial crisis, the arts commission, which makes grants to local arts groups, is asking for a 36-percent increase (from $592,900 to $809,000) on the fiscal 1982 budget now being prepared.

"More than 3.5 million people attended performances and exhibits sponsored by nonprofit arts organizations in the city in 1976 -- not including special events like the Festival of American Folklife," said D.C. Commission chair Peggy Cooper in an impassioned plea that connected arts funding to employment, city revenues and the rejuvenation of the downtown area. "People who attend those events spend money on food, and there is city tax on that food. More than $100 million will come into the city coffers through activities generated by the arts."

Asked later whether most of that money was generated by the bigger arts institutions -- which the commission does not fund -- Cooper replied, "The people who go to New Playwrights Theatre [which the commission funds] eat. The people who go to GALA eat. It may not be filet mignon dinner money. But it's at least hotdog money."

More than 100 people showed up for the hearing -- 16 of them listed to testify -- at the City Council chambers. Patrick Hayes of the Washington Performing Arts Society, Al Nodal of the Washington Project for the Arts, the Cultural Alliance's Peter Jablow and the Corcoran's Peter Marzio all showed up. Marcus Raskin, director of the Institute for Policy Studies, came, but had to leave before it was his turn to testify. Nine of the 15 commissioners attended, and Mayor Marion Barry appeared briefly.

The requested increase over the 1981 commission budget (which still must be approved by Congress) amounts to some $216,000 -- small by comparison to the $1.5-billion city budget, but one of the largest percentage increases of any of the agency budgets submitted by the mayor.

"These are hard times," said councilman John Ray. "Drug counselors and Lorton counselors are getting cut back. Now how do you justify your increase -- which is substantial in relation to your budget?"

"I'm not going to tell you the commission budget is more important," said Cooper, "but I'm not going to tell you it's less important. The commission dollar stretches as far as any other. In hard times we have to go with the longest dollar. In addition, arts programs keep needles out of arms, heads out of jails and food on tables."

The proposed arts budget for fiscal 1982 "constitutes about five-hundredths of one percent of the total district budget," said Peter Jablow, in written testimony. "Yet every dollar the city spends on culture should bring back two to three dollars directly and far more indirectly."

Council member Hilda Mason asked Cooper: "Would you be agreeable to raising taxes to fund the commission's full increase?"

Cooper said, "Yes -- if there were a check-off for the arts."

Cooper also told the commission that many city arts groups are hindered when they search for private-sector funding if they have no city funding to begin with. "Some people feel, 'If the city doesn't give them funding, why should we?'"

Len Dyson, executive director of The Rep Inc. theater group, asked the council, "Why should we punish the artist because he or she chooses this profession? The artist has employment problems and housing shortages."

Amina Dickerson, program officer for the Museum of African Art, and an alumna of the Workshops for Careers in the Arts program, told the council, "The futures of the Ellington students [funded by the D.C. Commission] depend on full arts funding so that the arts careers they are so tirelessly working on can happen. Each time the funding is cut, we damage their careers."

The arts commissioners argue that funds produce more jobs per dollar in the arts than, for example, in the school system. Commissioner Vernard Gray said earlier this week, "It's hard to argue against teachers being laid off, but we have to look at how far a dollar goes. Two hundred thousand dollars will hire maybe 10 teachers. That same amount will hire at least twice, maybe 2 1/2 times as many artists." tBut one City Council member said Monday that even if only eight teachers could be hired for $200,000, "eight teachers can do a lot."

Council member Charlene Jarvis appeared skeptical of the budget request. "We're going to have to give some hard thought to this," she said. "I want everyone who wants money to have it -- but that can't be."

But council member Polly Shackleton, head of the committee which oversees the arts commission budget, called the hearing "excellent. I favor the increase. But I know some of the other council members have problems with it."

The commission has received sizeable increases in the past. From fiscal '79 to '81, the budget rose from $167,100 to $356,400 to $592,900.

Commissioner John Kinard, head of the Anacostia Neighborhood Museum, testified on behalf of the increase yesterday. But he admitted last week that the amount was "unusual. If I were a council member looking around and seeing people losing their jobs in my ward, I'd think, 'And I'm giving $200,000 for singin' and dancin'?'"