Fiscal year 1979 arrived with good news for the Maryland arts community at both state and local levels.

The Maryland Arts Council authorized a $1,211,120 budget - up substantially from last year's figure of $860,000. The council budget is derived from federal and state sources, but this year's increase is due primarily to a sharp rise in the state contribution. State funding this year will be $855.380, compared with last year's allocation of $473,126.

The council executive director, Kenneth Kahn, said the increase represents a recognition by the legislature of the compelling needs of the state's major arts institutions. Traditionally, 50 percent of the council's grants go to the major arts organizations which are in the Baltimore area where half the state's population is concentrated, said Kahn. By making more money available for the major arts groups the legislature has also freed some of the federal money for use throughout the state, he said.

The federal allocation of $355,740, which comes to the council through the National Endowment for the Arts, has been designated for use as follows: $233,000, block grant; $33,650, small professional arts groups; $50,000, artists-in-schools program; $30,000, state-county partnership program, and $9,090, folk-life fetival, to be held this year at the Wye Institute.

With its budget in hand the Maryland Arts Council determined its allocation of funds to arts groups within the state. A total of $650,000 is ear-marked for six major arts institutions in the Baltimore area. The Baltimore Orchestra will receive $300,000; Center State, $80,000; the Walters Art Gallery and the Baltimore Museum of Art, $75,000 each; the Baltimore Opera, $70,000, and the Maryland Ballet, $50,000.

The Maryland Dance Theater, based in Prince George's County, received the largest grant given outside those to the major arts groups. The council awarded the Maryland Dance Theater an $18,000 grant in recognition of its artistic excellence and its statewide touring program.

Fifty-three other arts groups across the state received council grants ranging from $500 to $4,000. Kahn said the council has approximately $30,000 remaining which will be distributed between September and May.

Six Prince George's County arts groups were among the local organizations awarded grants by the council. Laurel Oratorio Society, Southern Maryland Choral Society and Prince George's Symphony received $500 each from the Council. The University of Maryland piano festival, University Community Concerts and a pilot program on arts for the handicapped at Great Oaks Center each received $1,000.

Four Montgomery County arts groups received council grants. Cedar Lane Stage and Library Theater each received $500. The Writers Center at Glen Echo was given $2,000 to publish works by Maryland authors, and the Jewish Community Center was awarded $200.

Challenge grants were also established with the three local arts groups. The challenge grant is a new program under which the council gives one dollar for every three raised locally if the group meets its goal in a fund-raising drive. The goal must be approved in advance by the council. Prince George's Symphony and Library Theater will each receive $500 from the Council if their targets are met, and University Community Concerts will receive $1,000.

In addition, the council will have up to $5,300 available on a matching basis for each county arts council through the state-county partnership program.

In both Montgomery and Prince George's County the county arts agency received a higher allotment from the county legislative body. The Montgomery County Council awarded Street 70, the arts division of the county's recreation department, $442,900 for fiscal year 1979. Last year Street 70 received $405,630.

Eliot Pfanstiehl, associate coordinator for Street 70, said the additional funds will be used to support the new Round House Theater program and salary increases mandated by the county.

In Prince George's County the arts division has been awarded $435,535, a small increase over its fiscal year 1978 budget of $410,950. Ellen Pierce, assistant arts coordinator for the arts division, said that most of the increase is due to mandatory cost of living increases. Pierce said the arts division has increased the money availale for local grants from $20,000 to $28,300 fortthis fiscal year.

Following the grants policy established by the Prince George's County planning board the arts division has awarded monies to 19 local groups. Prince George's Symphony and Prince George's Philharmonic received $5,000 each from the county arts division. Prince George's Opera was awarded $4,000; Maryland Dance theatre and Laurel Oratorio Society, $2000 each; Prince George's CHoral Society, $1,750; Greenbelt Concert Band, $1,500; Musicomedy Productions, $1,000; Marlborough Masquers, $750; Bowie Knights of Harmony, $575, Greenbelt-Lanham Chorale, Marylandaires, Maryland Sounds, $500 each; Con Viva Musica, $400; Kwanzaa Choral Ensemble, Prince George's Chamber Music Association, Belair Madrigals and Potomac Ballet, $250 each.

Pierce said a limited amount of money is still available for smaller awards to Prince George's County groups throughout the year.