His cardboard sign saying "Give Us Hope" tilted as 26-year-old John Bashner wobbled off the sidewalk.

Reaching out a hand to steady his mentally retarded son, Sam Bashner of Silver Spring explained that his son lived in a group home that is seeking financial aid to help it stay in existence.

"He's much happier there than in an institution but it's always touch and go."

The Bashners were among a crowd of 300 Maryland citizens that converged on Annapolis Sunday to demand more funds from Gov. Harry Hughes for the mentally retarded.

Chanting slogans and carrying signs, the group of retarded people, their families and mental health workers marched around the governor's mansion for two hours before dispersing quietly into the winter afternoon.

They had come from areas of the state as widely scattered as Hagerstown, Baltimore and Severna Park to ask the governor for $12 million in state funds. Montgomery and Prince George's counties were represented by more than 100 people.

Along with the funds, the citizens were seeking more alternatives to large state institutions, better care for those in institutions and research in mental retardation.

"We know the state isn't impoverished," said Ben Gould, legislative chairman of the Maryland Association for Retarded Citizens (MARC). "They can accommodate what we're asking for."

He thrust his hands into his raincoat pocket as the group shouted, "One-two-three-four. What's the governor waiting for?"

"We hope the governor responds to this," Gould said.

If he doesn't, a public interest legal group, the Maryland Advocacy Unit for the Developmentally Disabled, says it is considering filing suit to force the state to help retarded citizens live as independently as possible.

The demonstration was hastly called, MARC President Monroe Karasik said, when the advocacy group discovered Hughes had only budgeted an additional $500,000 for new programs for the retarded in his 1980 budget.

"This is hopelessly inadequate," Karasik said.

MARC leaders want Hughes to provide the additional $12 million from a $229 million state surplus. The money, they say, would improve the lives of 2,571 institutionalized retarted citizens and an undetermined number of retarded adults with emotional problems for whom no services exist.

Hughes now has $15 million dollars budgeted for the Mental Retardation Administration, the stage agency that administers programs for the retarded.

Gene Oishi, Hughes press secretary, said, "The governor was aware of the demonstration and he is sympathetic to the needs of these people."

But, continued Oishi, rising fuel, education and transportation costs as well as a tax deduction Hughes pledged to citizens during his campaign will considerably decrease the state's available funds.

"There will be some increase (in the Mental Retardation Administration) budget but not as much as some people would like," he said.

Federal law now requires the state to educate its retarded school age children. After age 21, they are no longer eligible for educational services and are returned to their families or institutionalized if the family cannot cope with them.

"They don't stop being retarded when they're 21," said Dorothy Taylor, a Montgomery County resident with a daughter now in the school system.

Local advocacy groups such as the Montogomery County Association for Retarded Citizens sponsor occupational workshops, training programs and funds.

But too many retarded citizens live in institutions when they could be part of the Community and earning a living, advocacy groups maintain, if the state would help fund more community programs.

"Deinstitutionalization makes sense in financial terms as well as human terms," Karasik said.