Occoquan has lost 1,368 people.

Somewhere between 1970 and 1980, the population of the town on the Fairfax-Prince William county border declined from 1,609 to 241.

At least that's what the Census Bureau has determined. And since the town's finances were based in large part on state and federal grants that are pegged to population, that has plunged Occoquan's government into a crisis.

"Needless to say," said Mayor Donald Lynn, "our budget is shot." Indeed, the Town Hall, a converted church, has been rented out and the once affluent town government stands to lose more than $24,000, almost half its annual budget.

"Just all of a sudden it happened; out of the clear blue sky," said Lynn, 50, a retired electrical contractor. "If the state or the Census Bureau had notified us in 1980 that the figures were down, we would have been ready for what was going to happen. But we went clear through 1982 and nobody said anything. Nobody said anything. Then all of a sudden one day everything changes."

According to Ann Liddle, of the count complaint unit of the Census Bureau, Occoquan's problem started in 1970.

"When the 1970 census was taken," Liddle said, "some residential units, apparently a considerable number, were included as part of Occoquan. Perhaps it was a map error. We can't be exactly sure. But when we took the '80 census, we discovered the error and revised the numbers."

So for the past decade, Occoquan enjoyed a comfortable cushion of state and federal funding, the kind that allowed them, for example, to supply the two-man police force, Lynn said, with "all the modern conviences," and to plan on installing brick sidewalks and a new parking lot downtown.

Then, in September of 1982, the quarterly Virginia state grant for law enforcement arrived. Instead of the expected $3,500, the town received $500. Frantic calls to Richmond lead to the uncovering of reality.

Hoping to make a dent in the expected deficit, Lynn's first move was to rent out Town Hall, a reconverted historic church at the center of town, to the owners of a gift shop for $900 a month. Town business was relegated to the basement.

A crafts fair has been planned for June, and the town hopes it will bring in about $10,000. State Sen. Charles Colgan, (D-Prince William) has introduced a $24,000 relief bill in the state legislature in Richmond, though Lynn said yesterday, after an emergency visit with Colgan on Wednesday, that "the possibility looks bleak."

Lynn, who was elected to the unpaid mayor's job in 1980, has also formed a committee to study the financial crisis, but he said he still thinks the census people are wrong.

Already the Census Bureau has recounted once. One additional person was found.

If the town wants another count, Lynn said he was told, it would cost $2,000 and the town would have to pay.

Lynn is confident, recount or not, that the town will get by. "We'll make it," Lynn said. "What we've got here is a fight against the state and federal governments."

"What we have here is a mistake that was corrected," said census supervisor Liddle. "As far as we're concerned, the matter is closed."