The Washington Suburban Sanitary Commission approved a preliminary budget yesterday that would raise the water and sewer payments of average Montgomery and Prince George's County homeowners by 10,8 percent, or by $16 to $35 a year.

The $356,7 million budget, which will be subject to public hearings, review by the county councils of both counties and possible changes before it goes into effect July 1, is designed to pay for a 16 percent increase in operating expenses in the next fiscal year.

Under the WSSC's proposed new rate schedule, sewer charges would go up 15 percent and water charges 6 percent, the combined charges being 10,8 perent higher than the existing rates. A family that consumed 20,000 gallons of water every three months would see its quarterly bills rise from $38.60 to $42.77, according to commission figures.

The increased operating expenses are attributed, in part, to the cost of operating two new plants that will transform sludge -- the solid residue of treated sewage -- into fertilizer, and to a $431,000 increase in the commission's payment to the District of Columbia for the suburbs' share of regional sewage treatment services.

WSSC General Manager Robert S. McGarry said last night that $200,000 in revenue also had been lost last fall because of the commission's delay in setting new, higher sewer hook-up rates, and that this loss "had definitely had an impact" on the budget.

Overall, the proposed budget contains an increase of only $4.7 million over this year, mainly because the commission cut $15 million from this year's allocation for new construction and other capital spending.

"I can't really say that the commissioners really made any major cuts, because we followed through with our departments and told them we wanted a bare bones budget," said WSSC chairman Johanna Norris. "I think there will be further cuts in capital improvements when the counties finish their review. But we are prepared to go forth and fight, and I expect we will have some heated discussions before it is over."

One possible area of controversy could be the WSSC's proposed CHANGES IN CHARGES TO SHIFT THE BURDEN of the cost of expanding sewer and water lines to those who move into NEW DEVELOPMENTS.

Instead of the current "front-foot" charge to homeowners for the cost of extending a sewer line -- levied on a building lot's frontage on a street -- the WSSC is recommending that the bill be increased to $1,775 for customers in new growth areas. This change would help keep rates down for citizens in developed areas, but would increase the cost of new housing, according to WSSC officials.

A second possible problem in the proposed budget could be the proposed $300,000 increase -- to $6.1 million -- in taxes the WSSC plans to collect in Prince George's County next year.

These taxes, which are distinct from the water and sewer charges, are collected by the county for the WSSC as part of the real estate tax. Because of this, officials unsure whether they would be governed by TRIM, the measure that voters approved last fall to place a ceiling on property tax collections at this year's level.

WSSC spokesman Art Brigham said yesterday that Prince Geroge's officials have requested an opinion from the state attorney general on the mattel.