The D.C. City Council adopted a $2.3 billion fiscal 1986 budget yesterday that includes the establishment of a $5 million rent subsidy program, an increase of $4 million for drug abuse programs and the restoration of $375,000 of a proposed cut in administrative funds for the University of the District of Columbia.

The council's budget reflects a $1.2 million reduction and a total of $30.3 million in shifts in the budget proposal submitted to the council by Mayor Marion Barry. Now, the budget must be approved by Barry and Congress.

Most of the recommendations approved by the council yesterday had been hammered out previously in the council's standing committees and in closed-door meetings.

Among the earlier decisions was the rejection of some controversial proposals that came out of the Housing and Economic Development Committee, headed by council member Charlene Drew Jarvis (D-Ward 4). The budget adopted by the council deletes funds for travel and promotion for the council. And, the budget recommends that city agencies provide Jarvis' committee with information, instead of the committee receiving additional resources for gathering information.

Polly Shackleton (D-Ward 3) successfully led a move to restore 21 positions and $375,000 to the University of the District of Columbia's administrative budget. The council's Education Committee had recommended cutting $808,000, saying that UDC's administrative costs were higher than other schools'.

Only Carol Schwartz (R-At Large), saying that the government is "running amok on a gluttonous spending binge," voted against the budget.

For the first time in three years, the council did not have to grapple with proposed program cutbacks or a tax increase. The budget review also coincided with the council's push for greater visibility and some members used the budget to address council priorities and to demand that Barry accept the council as an equal partner.

"We got a lot of changes made and some major things were done," City Council Chairman David A. Clarke said of the budget. "Everybody has something to take pride in."

Jarvis said that the council had demonstrated real progress: "The council has really come of age in this year . . . . I think we really have a better understanding of the balance of power."

Barry, through a spokesman, said the council's action "clearly indicates that there is cooperation between the legislative and the executive branches of our government contrary to what the media may portray" and that "the council's priorities are the same as mine."

The council's recommendations included:

* Spending $5 million on a rent subsidy program, which is authorized by the city's current rent control law but has never been funded. In a letter to the council, Barry said that he would support the $5 million proposal if acceptable guidelines are established and is prepared to recommend a $15 million rent subsidy program in fiscal 1987.

* Increasing the funds for drug abuse programs by $4.07 million, an increase of more than 100 percent over the approved fiscal 1985 budget and an increase of 210 percent over the fiscal 1984 expenditures for drug abuse.

* Adding 11 positions to the council's staff, one each for the council's standing committees, at a cost of $323,000. "It is clear that some greater resources are needed if the council is to play its equal and proper role in the government," the council's budget report stated.

* Designating $5 million to reduce the city's $270 million general fund deficit. The council also recommended that the city request an additional $23.3 million in the District's federal payment -- which reimburses the city for services provided to the federal government and is a substitute for property tax revenues on federal property -- and use the entire increase for deficit reduction. Barry's budget proposal did not include any funds for reducing the deficit.

In a statement, Schwartz, who became a member of the council in January and had suggested that committee chairmen cut the budget by $100 million, criticized the council for failing to make "substantial cuts" and for not reducing taxes.

"Where cuts were found at all, for the most part, they were gobbled up to be spent elsewhere," Schwartz said. " . . . The philosophy of this government is that if a problem exists, the solution is to throw some money at it . . . . Spending taxpayers' money is apparently much easier and a good deal more fun than looking toward economies and savings."

One by one, the other members rejected Schwartz's statement and said that the budget reflected the city's needs. Council member Frank Smith (D-Ward 1) said he gets daily requests for improved services but no telephone calls from people asking that their taxes be reduced.

Council member John Ray (D-At Large) called Schwartz's assessment a "very fine political statement" and questioned why Schwartz had not introduced her own budget proposals.

Schwartz responded by saying that as a new member "you're damned if you do and damned if you don't" and that "I knew I would step on more toes by coming in with specific budget reductions."