The Maryland General Assembly's three-month session was characterized by a disdain for substantive policy making and by factional infighting over the state's shrinking fiscal resources.

The legislature's agenda was determined in large part four months before it began when the state's Board of Revenue Estimates reported that recession-prone tax collections had fallen well below expectations and that the era of huge state surpluses was over.

Gov. Harry Hughes responded by slashing funds from the current year's budget and submitting a budget proposal for next year that contained the smallest spending growth in a generation.

At the same time, Hughes set the stage for the legislature's most significant public policy debate by omitting budget funds for an employes' pay raise, an increase in welfare benefits and two education aid programs dear to the legislature's leaders. The governor said that his goal during the session was to find a way to pay for these items in a budget supplement.

With a tight budget and its highly publicized gaps before it, the legislature convened in a somber mood, its leaders apparently convinced that they could not work for major new programs or policy changes this year.

Only the perennial special interest forces -- banking, insurance, real estate, liquor -- seemed to be accomplishing anything as the first two months of the session passed, and it seemed that Hughes and the legislators under the cover of fiscal crisis, might just abandon for a year the public policy debates that normally overlay and obscure the economic and regulatory manipulation and trench warfare that fills most of the General Assembly's time.

Slowly, however, a series of fiscal and policy issues began growing almost in spite of the do-nothing mood, generated in many cases by people and forces outside the Statehouse, until in the last month the languid pace of hearings and floor sessions was exploded by a series of crises.

The first development came with the legislature's attempt to discipline one of its members for ethics violations. Landover Del. Francis J. Santangelo (D), who violated state law by failing to disclose his interests in a business that he allegedly pushed for state contracts, was "noted for disapproval" by the House after a year of investigation, but not before House members spent 90 minutes denouncing ethics reforms and vowing to prevent such self-discipline from occurring again. In the following weeks, the outburst over the Santangelo case, which shocked legislators who had promoted ethics reforms after a generation of political scandals, was repeated time and again in the assembly.

Then, early in March, there was a sudden and unexpected outbreak of budget-cutting fever in the House, which was the first to consider Hughes' already tight budget. Admittedly inspired in some cases by the program slashing that dominated the news of President Reagan's first weeks in Washington, the House approved cuts of $54 million -- or almost 1 percent -- in the budget.

The budget cuts were in many cases extreme, including wholesale slashes of state programs and deep bites into welfare and Medicaid funds, and they touched off a controversy that did not end until last week, when the assembly enacted a final $5.6 billion budget that compromised or eliminated most of the more drastic House amendments.

Weeks of sometimes frantic lobbying by Hughes did not succeed in reversing several controversial cuts, however, such as a $11 million deferment of Medicaid money that state officials say will eliminate thousands of poor people from health-care rolls.

Even as the budget debate raged in mid-March, the state's fiscal experts dumped in Hughes' lap the very political choice he had hoped to avoid all along: new taxes versus his unfunded programs. The Board of Revenue Estimates' March report, to the surprise of Hughes and the legislature's leaders, continued the same gloomy outlook for tax collections that had prevailed for months, eliminating the governor's hope of paying for the employes' raise and the education aid with a sudden influx of new revenue.

For 10 days, Hughes weighed his options, even as legislators on the floor below warned him that the time for decisions had already passed. Finally, only three weeks before the General Assembly's adjournment, Hughes submitted a $68 million package that attempted to tie the gasoline tax and two other new revenue measures to a $500 across-the-board raise for employes, the education programs and new transportation projects.

The complex, interwoven proposal lasted only four days in the factional and political crossfire that by then controlled the assembly more than its traditional leaders. The Senate quickly killed the employes' pay raise, insisting in effect that the money would be better spent on roads and bridges, and later killed Hughes' second major revenue measure, a proposed increase in truck fees, in part because its members had all along been partial to the gasoline tax.

By last week, Hughes had abandoned hope of passing any part of his package but the gasoline tax -- and that measure died in the final hours of the session. The education aid programs, meanwhile, had been deftly peeled away from the rest of the controversial plan and rushed toward enactment by their chief proponent, House Speaker Benjamin L. Cardin.