It was budget time and the board of trustees of the Woolly Mammoth Theatre Company withdrew behind closed doors to consider the salaries of Howard Shalwitz and Linda Reinisch, the artistic and managing directors of what has become in eight years Washington's most influential experimental theater troupe.

After long deliberation, the board decided to pay them each $24,000 a year. Shalwitz and Reinisch mulled over the proposition, then countered with an offer of their own. They would accept $22,000 apiece.

Dedication? Pragmatism? Foolhardiness? Contrariness? All of the above probably figure in their decision, as they have in the fortunes of the company itself. Beginning with its name -- which won out over a long list of planets, astrological signs and Greek gods just because it sounded offbeat -- Woolly Mammoth has its own way of doing things.

"I remember thinking how the hell am I going to sell a theater called Woolly Mammoth," laughs Reinisch. "The first thing the critics are going to say if they don't like our shows is, 'The woolly mammoth is extinct and this theater should be, too.' "

Unlike that shaggy denizen of the Ice Age, Woolly Mammoth not only survives, it is flourishing. Last week, it officially opened its new quarters at 1401 Church St. NW (the former site of the Studio Theatre), which it intends to alter significantly in the months to come. For the time being, the transformations are limited to a redesigned and expanded lobby and a spruced-up auditorium, painted midnight blue, but new seats should be arriving momentarily. And down the pike, the company plans to carve a second performing space out of the 7,000 square feet that, in its current configuration at least, suggests a rabbit warren viewed through a kaleidoscope.

Whatever reservations its name once inspired, Woolly Mammoth has artfully shaped itself over the years as a different kind of theater. It exists on what passes in Washington, at least, for the outer edge, although it has never been so far out as to leave theater-goers with indignant question marks emblazoned on their faces. With such works as "Marie and Bruce," "And Things That Go Bump in the Night," "The Choir" and "Savage in Limbo," it has incited controversy, ruffled feathers, opened eyes and, with remarkable consistency, kept the pot boiling.

Much of its fare, in fact, has consisted of works that flopped elsewhere and were left to die. Hence, there's a kind of double pleasure to be taken at Woolly Mammoth. It's one thing to be moved by a revival of "A Streetcar Named Desire," quite another to discover, say, the pleasures of "Life and Limb" or "Christmas on Mars," plays not exactly on everybody's lips.

So what is the Woolly Mammoth doing to launch its eighth season, the first in a home it can rightfully call its own? Brace yourself. "Harvey." Yes, Mary Chase's comedy about Elwood P. Dowd, that gentle tippler and affable dreamer whose best friend is an imaginary 6-foot-1 1/2-inch white rabbit. A resounding hit in 1944, it ran 1,775 performances on Broadway, won its author a Pulitzer Prize and inspired a beloved film, starring James Stewart. (The production opened last night.)

" 'Harvey' is the most foolish thing we've ever done, certainly the closest we've ever come to staging a sentimental comedy," says Shalwitz, relishing the improbability of it all. "Seemingly, it flies in the face of everything we stand for." Even the theater's brochure points out, "This is one for the whole family, and that is something we can't say often at Woolly Mammoth." Indeed, it's every bit as surprising as Ford's Theatre choosing to stage "Oh! Calcutta!" In a curious way, however, Woolly Mammoth may be running wholly true to form.

It has long been concerned with misfits and oddballs, trying to pick their way through a society riddled with mines, which, advertently or inadvertently, they end up detonating. What greater misfit than Elwood P. Dowd, who first spotted Harvey leaning up against a lamppost when the gregarious rabbit called out his name? "I thought nothing of that," Elwood explains with the logic of the sweetly cracked. "When you've lived in a town as long as I have lived in this one, you get used to the fact that everybody knows your name."

Elwood's lovable, if fanciful, disposition, is in severe jeopardy, not that he knows it. His increasingly exasperated sister wants to commit him to a rest home, where a doctor could administer "shock formula 977." The injection is guaranteed to abort his hallucinations and make him into a perfectly normal human being. And to quote playwright Chase: "You know what bastards they are!"

"You get pegged for doing a certain kind of theater," concedes Reinisch, "and there are those who say, 'What is Woolly Mammoth doing "Harvey" for?' But why not? We've always been interested in the way people find one another or don't, how they connect or don't. Here was a warm and loving play about the imagination and the freedom to explore. That's always been on our minds."

"The more we've worked on the play," adds Shalwitz, "the more I've come to realize that 'Harvey' is a Woolly Mammoth play from the 1940s. One of the central characters is invisible. Everyone is on the verge of making the wrong choices. Until the situation is resolved, it teeters on the edge of tragedy, like most good comedies do."

As this year's season has fallen into place, however, "Harvey" has come to represent more than a pleasantly quixotic choice for a theater that has long made a virtue of the unexpected. From the start, the company knew it wanted to stage Wallace Shawn's "Aunt Dan and Lemon," a scorching drama about evil and the complicities it breeds. Yet the plays seemed worlds apart. "Harvey" is set in an innocent Frank Capra-esque world, which was just coming out of World War II and was ready to celebrate the individual's right to happiness, however cockamamie. On the other hand, "Aunt Dan," set in the 1980s, introduces us to a young female recluse whose reminiscences of growing up with a singular Oxford don she calls Aunt Dan bring to the fore the brutality of our times and the flaccidness of our moral fiber. If "Harvey" provokes generous, accepting laughter, the humor in "Aunt Dan" is bilious and disquieting.

How did we get from one point to the other? As Shalwitz grappled with the question, the thrust of the season suddenly came into focus: Four comedies that would usher the audience from affirmation to negation, from gentle quirks to raging neuroses, from the smile to the rictus. The theme: Comedy Descending.

To follow "Harvey" in February, Shalwitz settled on Alan Bowne's "Sharon and Billy," an unsettling comedy that depicts the disintegration of a 1950s family when a teen-age girl learns she is pregnant by her brother. A huge hit for San Francisco's Magic Theatre, it has been described as "the neurotic underside of television's 'Father Knows Best.' " Then, to play in repertory in June with "Aunt Dan and Lemon," Shalwitz turned to "The Vampires" by Harry Kondoleon.

A wild farce, "The Vampires" involves a guru, an addict, two repressed housewives, a bad playwright and his brother, who happens to be a drama critic. As he demonstrated in "Christmas on Mars," a 1986 Woolly Mammoth hit, Kondoleon treats the most distraught of characters with the loopiest of humor. In "The Vampires," he filters the supernatural into the mix, and, apparently, everyone ends up flying through the air before long.

Its zaniness, Shalwitz feels, pushes it in the direction of "Harvey," but its acute awareness of pain and guilt connects it to "Aunt Dan and Lemon." The season also follows a natural progression of time, he points out. "Harvey" comes out of the 1940s, and while the others are contemporary works, they deal with the 1950s ("Sharon and Billy"), the 1970s ("The Vampires") and the 1960s as they've impacted on the 1980s ("Aunt Dan and Lemon"). Whether the season checks out quite so neatly in practice remains to be seen. The concept is, nonetheless, provocative.

Presumably, we'll still be laughing by June, but what will be the quality of our laughter? "We're not saying that as a society we've blown it," says Reinisch. "But one of the questions we're asking is, 'Did we all take the injection that makes us not able to see Harvey anymore?' "

There have been fallow periods in Woolly Mammoth's history and it has known its share of productions that fizzled, when they didn't simply self-destruct. For want of a suitable home, it went underground for eight months, beginning in the summer of 1985. Yet, despite the vicissitudes, it has retained a strong identity with the public, which has been willing to follow the company into floating exile. (Last year, Woolly Mammoth spent the first half of its season operating out of the New Playwrights' Theatre, the second half out of the Washington Project for the Arts.

The statistics are cheering. In its first season, 1980-81, it performed two plays at the Church of the Epiphany in downtown Washington on a budget of $7,000 and attracted 500 spectators. By mid-1986, arguably the breakthrough point, its budget was up to $170,000 and it registered attendance of 8,000 with a three-play repertory ("Christmas on Mars, "And Things That Go Bump in the Night" and "New York Mets") that met with unprecedented critical approval. What had started out as a kind of hip, fringe theater group -- not without its navel-gazing aspects -- had substantially broadened its appeal: At least 43 percent of the audience was traipsing in from suburban Maryland.

This season, the budget has taken another leap -- to $350,000, with an additional $40,000 earmarked for improvements to the new home. Although it continues to view itself as an underdog, Woolly Mammoth has, in fact, joined the mainstream, without shedding its reputation for adventurousness. "There is no predicting the hit plays," admits Shalwitz, and consequently, he doesn't try.

"There are enough theaters that do plays to make money or at least attempt to include what they call 'an audience show' in the lineup. There's no need for us to exist on those terms," echoes Reinisch. To protect itself against the temptation to pick a play solely for its box-office appeal, Woolly Mammoth assumes from the outset that ticket sales will account for only 50 percent of its income. If its shows outdistance projections, so much the better. But "to postulate a higher percentage, when we're drawing up the budget, just takes away our ability to be free," she says.

It is that freedom that has attracted a core of talented performers (Nancy Robinette, Gra'inne Cassidy, Michael Willis, Jennifer Mendenhall, Grover Gardner), directors (Jeff Davis, Todd London) and writers (T.J. Edwards) to the Woolly Mammoth cause. Not old enough to have formed habits, still young and eager enough to venture out on limbs, they constitute a remarkably flexible ensemble.

The 135-seat Church Street facility will now allow the company to bring all of its operations -- scene and costume shops, administrative offices and rehearsal space -- under one roof for the first time. It also means that for the foreseeable future the public-at-large will know where to find the once-peripatetic players. Woolly Mammoth is settling in, although presumably not settling down.

In theatrical circles, its influence has already been felt. No one can say the troupe invented repertory -- alternating productions nightly -- but the practice has become more common in the city's smaller theaters ever since Woolly Mammoth revived it so successfully in 1986. Its willingness to embrace a scratchy, unconventional dramaturgy has made it easier for other theaters to follow suit, and they have. It could even be argued that Arena's decision to get back to a rougher, more experimental esthetic this season, with its Stage Four series, was prompted, in part, by Woolly Mammoth's increasingly visible profile.

"We're certainly not weirdos," says Reinisch. "Oh, I have an automatic aversion to authority. It's built into me. But Howard and I function just swell in society. We just happen to be attracted to the offbeat. Anything that doesn't have an edge doesn't interest us. We know it already."

"I see the quirkiness of the plays we do as showing us the underside of normal behavior, as magnifying the madness that exists in everyone," says Shalwitz. "I'm guess I'm just a person who doesn't want to do what others are doing."

Like refusing a salary increase, when it's handed to you on a platter, although he adds, "I don't think we'll be doing that again."