The Virginia Senate Finance Committee adopted its version of the state's $18.5 billion two-year budget today, differing sharply with a House committee over pay raises for state employes.

The Senate committee proposal included money for the second-year employe incentive pay raises, totaling about $27 million, but the proposal adopted by the House Appropriations Committee Saturday would fund the raises next year on the basis of growth in the economy.

"The House has made some decisions we are not going to agree with," said Senate Finance Committee Chairman Edward E. Willey (D-Richmond). "The philosophy of the House is quite different from the philosophy of the Senate. We're going to have quite a lively discussion."

Other issues yet to be resolved include how much money should be spent on human resource projects -- the House supports more innovative programs, including day care, a study of teen-age pregnancy and public assistance for the working poor -- how to divide the money for public colleges and how large a reserve fund should be maintained.

Willey said that the "$13 million reserve [in the Senate version] is mighty little to do business with."

The House is considering two Senate bills that would provide a $60 million cushion, which is "what I think is really necessary to run a good fiscal operation," Willey said.

"We are concerned about the effects of the federal budget cuts," added Senate Majority Leader Hunter B. Andrews (D-Hampton), a finance committee insider.

In one area of agreement, the Senate committee, as did the House panel on Saturday, provided the $376 million needed to fully fund the state's share of the costs of public education.

Another difference in the approaches of the two chambers was that a few senators, meeting in secret Saturday, made all of the budget decisions -- ratified today in a one-hour public meeting of the full committee -- while the House committee did most of its work in public subcommittee meetings.

"Don't hand me that stuff that they do everything in public," scoffed Willey, who rules the Senate budget process with an iron hand. "They call a subcommittee meeting for 7 o'clock in the morning, and one member and the staff shows up."

Willey said making the decisions in public would not lead to greater understanding because "you wouldn't understand it if we did it line-by-line. Would you understand what a bank board was doing?"

Several dozen reporters and lobbyists who showed up to watch the Senate committee go through the motions today had to share a few copies of the budget amendments.

"It's not even being shared with the committee. Don't feel put out," said Sen. Joseph V. Gartlan Jr. (D-Fairfax), who is not among the members of the so-called Secret Seven insiders.

The Senate and House committee decisions are subject to approval of their full bodies on Wednesday, but discussion or changes on the floor are rare. The differences will be fought out in a conference committee that is likely to take up most of the remaining three weeks of the General Assembly session.

Sen. Clive L. DuVal II (D-Fairfax), who joined the insiders' club time this year, shrugged when asked if he thought the budget decisions should be made in the open. Asked if he would support open meetings of the conferees, DuVal said he would have to think about it.