Virginia Gov. Gerald L. Baliles today proposed a study that could call for changes in the basic structure of local governments in the state by converting urban counties, such as Fairfax and Arlington, into cities.

The issue, which has been repeatedly studied, is one of the most sensitive political questions in Virginia. Previously governors have tried to change the the structure of local governments, but questions, such as racial balance and political power, have combined with other issues to kill the proposals.

Virginia's cities are not part of counties, a structure that has created sharp tensions and led to a ban on annexations by cities.

Baliles said today his study also might call for consolidating some smaller governmental units, such as school systems. Merging smaller school systems might improve quality of education, he said.

The governor unveiled his proposal, which he said he had been "thinking about a long time," at the start of a week in which he, several cabinet secretaries and aides will work in temporary offices here.

Occasionally taking the state government out of Richmond and closer to the people was one of Baliles' campaign promises. The governor dedicated the first regional state office building here today.

At a luncheon with area officials, Baliles said local governments should ask: "What do you want to be?" If adjoining jurisdictions find no difference with their goals: "Why not all be the same?" he asked.

"Now is an appropriate time" to consider realignment, Baliles said, because federal budget cuts, required by the Gramm-Rudman-Hollings deficit reduction law, affect cities and counties differently, as does financial aid from the state.

The governor said counties originally served rural areas and received substantial state aid, while cities had larger tax bases and served urban areas.

But "time and events have blurred the definitions," he said. Post-World War II growth patterns have resulted in the state's having "rural cities and urban counties."

The legislature has allowed six forms of county governments, Baliles said. But until officials "come to terms with city-county definitions, it is unlikely that alleged inequities in various funding formulas ever will be corrected."

The vehicle for examining possible changes in the structure of local governments, he said, is a resolution passed by the recently concluded legislature designed to find a way to halt annexation of land by cities from counties.

"An indication of what is coming," Baliles said, is the proposed new city of Alleghany Highlands, which, if approved by voters, would consolidate the cities of Clifton Forge and Covington, and Alleghany County, near here.