A proposed new veterans hospital for downtown Baltimore, considered a top Veterans Administration priority for several years, has become so enmeshed in political controversy that angry Maryland politicians fear the facility might never be built.

The VA, which had put Baltimore at the top of a five-year list of priority projects and featured it on the cover of its construction needs report, maintains that a new VA hospital might still be built.

But the $111 million project, in the planning stages since 1977, is missing from President Reagan's budget for fiscal 1985. According to the project list released by the VA last week, Maryland is to receive only $2 million in next year's budget -- not for a new hospital, but for renovations at the two existing facilities. This despite the $8.3 million federal dollars already spent to buy a site and draft working plans for a new hospital, originally scheduled for construction in 1985.

"Two million dollars won't even get the plumbing straightened out," Democratic Rep. Barbara A. Mikulski of Baltimore said last week. "One day we were in the budget and the next day we were out. It is a disgrace that the president of the United States is nickeling and diming the nation's veterans."

With the House, Senate and the Veterans' Administration initially supporting funding for a new Baltimore hospital, some Maryland members of Congress are wondering whether its exclusion from the budget is a subtle form of political punishment by the Reagan administration because the heavily Democratic state voted for President Carter in 1980.

"Clearly there are some politics involved," said Democratic Rep. Steny H. Hoyer of Maryland's 5th District in Prince George's County. Hoyer, who has been leading the fight to build a new hospital, said, "If I were a stalwart in the Republican Party, I think we would have a better shot at funding."

Even more galling to Maryland legislators was the VA's revised list of priority items issued last week after Congress asked the VA to reconsider the Baltimore project and a Philadelphia project excised from the president's budget despite initial VA approval.

The updated list included funding for Philadelphia -- which House committee staff aides and some members have said was more easily justified because it is still in the design stages and is in an area of obvious medical need.

"We can't figure out what the politics are," said an aide to Sen. Charles McC. Mathias (R-Md.). "Two million dollars to renovate old facilities is a big waste of money. This doesn't please anybody."

Administration officials contended that the Baltimore project originally was cut from the budget as part of an overall trimming of federal spending and because there already were facilities in Baltimore to serve veterans.

Edwin L. Dale Jr., a spokesman for the Office of Management and Budget, said last week that the White House Budget Review Board vetoed the project last winter because "the Baltimore area as a whole is overbedded."

Dale said the White House would consider building a new facility in Baltimore if one of the two existing VA hospitals there, Loch Raven or Fort Howard, were closed. The current $2 million request to modernize Loch Raven and Fort Howard "would not preclude a new hospital," said Donna St. John, a VA spokesman.

The Reagan administration has a vocal ally in the Maryland Hospital Association, which for four years has opposed a new veterans hospital on the grounds that the Baltimore area has "excess hospital capacity." Of Maryland's 54 hospitals, 24 are in the general Baltimore area, according to the MHA.

"It makes no sense for a veteran in Montgomery County to have to travel to Baltimore for care," said Rick Wade, a vice president for public affairs at the MHA. Wade said MHA proposed an experimental voucher system for veterans that would allow them to get treatment at any hospital and then be reimbursed by the VA. Neither the Carter nor Reagan administrations were enthusiastic about the voucher idea.

Proponents of the new VA hospital, led by Hoyer, disputed claims that there are too many hospital beds in Baltimore and said the only bed surplus is for pediatric and obstetrics services that most veterans do not require. They contended that a new facility is needed to replace Loch Raven -- built in 1952 as a sanitorium for tuberculosis patients -- and Fort Howard.

Hoyer and other Maryland legislators say the existing facilities and a smaller VA center for psychiatric care in Cecil County are too small and ill-equipped to cope with the state's 629,000 veterans, half of whom will be over 65 by next year.

The Maryland congressional delegation has endorsed a plan to transform Loch Raven and Fort Howard into nursing homes and build a replacement hospital adjacent to the University of Maryland Medical School, which has agreed to supply some equipment and technology for veterans' care.

"Our facilities are hopelessly inadequate and from the cost-benefit point of view unsalvagable," Mathias told a Senate Appropriations subcommittee last spring. He added that Loch Raven lacks modern technology and equipment and has only two operating rooms to serve 100 surgical patients each day.

As a last-ditch effort, Hoyer, a member of the House Appropriations Committee, will try this month to add language to the continuing budget resolution to allow the $2 million in funds for Maryland to be used for further planning of a new VA facility. He said he is confident that the project can be saved, especially if it is scaled down. "I feel we are getting a sympathetic ear on the committee," he said. "Obviously we won't get full funding but maybe we can stay in the ball game . . . and set the premise for full funding next year."

Meanwhile, those Maryland Democrats who think Republican politicking could doom the hospital are using the issue to criticize the Reagan administration.

"It is hypocritical for the president to go to Normandy on D-Day and shed tears and come back here and not help the veterans he says he is proud of," said Mikulski, who is national cochairman of the Mondale-Ferraro presidential campaign.

"He wears the hats and blows his nose in the Kleenex, but it is all politics and platitudes," she added. "I think he should have made the announcement [that no funds were available for the new Baltimore hospital] when he spoke [last week] to the American Legion."