The Washington Suburban Sanitary Commission (WSSC) has approved and sent to the Montgomery and Prince George's county governments a proposed $276 million budget for fiscal 1981 that would increase water and sewer rates by 35 percent.

For the average consumer paying $145.60 per year for water and sewer services, that translates into an increase of $51.20. The rate hikes, if finally adopted by the two county councils and the WSSC, would go into effect on July 1.

According to commission members, the increases were spurred by spiraling inflation and by declining revenues due to lower consumer use of water and sewer services.

"We're a big utility but we have to pay our bills too," said WSSC member Jesse Maury. "And as far as I can tell, no one is immune to an inflation rate of 14 to 15 percent."

According to Maury, the WSSC would face a $22 million deficit at the end of the next fiscal year if it did not increase the rates.

The proposed 1981 budget is nearly $78 million less than the current one. The capital portion has been cut by about 44 percent, or $100 million, while the operating portion actually increasing by 15 percent.

The cuts in the WSSC capital budget had no effect on water and sewer rate levels because capital improvements are funded by bonds sold by the WSSC. The operating budget, on the other hand, is funded with money collected from consumers for water and sewer services.

The drastic $100 million cut in the capital budget is the result of sharp and long-standing disagreements between Montgomery and Prince George's governments over how many and which capital improvement projects to fund. There is now a freeze on new capital improvements -- WSSC has agreed to fund only capital projects begun before July 1, 1980.

The three most substantial projects involved in the controversy are two pipelines -- to the Piscataway and Western Branch sewer treatment facilities -- and an expansion of the Piscataway sewage treatment facility. Montgomery has supported all three projects, while Prince George's has opposed them.

If the three projects were completed, the amount of sewage processed in Prince George's would be substantially increased, because all three of the larger sewer treatment plants run by the WSSC are in Prince George's -- Piscataway, Western Branch and Parkway.

Montgomery, the site of two smaller plants, has been seeking additional new capacity in recent years to serve new development. Instead of building new facilities in the county, Montgomery officials have urged the expansion of the larger, existing plants in Prince George's.

That effort has drawn substantial opposition from the Prince George's County Council. One well-placed WSSC source said that the crux of the problem is that "the Prince George's officials says that they don't want Prince George's to become the sewage capital of the area. They want Montgomery to build its own facilities."

The two county councils have negotiated secretly over the controversy in the last several months and an agreement is expected sometime this week. If an agreement is reached, money for the additional capital improvement projects would come from bonds sold by the WSSC.

"It's really imperative that the deadlock between the two counties be broken," said Robert S. McGarry, general manager of the WSSC. "Otherwise I think the freeze on our capital program could have a devastating effect on industrial and residential development in both counties."

The proposed 1981 WSSC budget will now be reviewed by the two county executives and councils. The councils' recommendations on expenditure and rate levels must be passed on to the WSSC by June 1. The WSSC then reviews the budget for the last time, adopts the expenditure limits set by the councils and adjusts the rates accordingly.