The budget has been tight for the Prince George's Town of Capitol Heights since the federal revenue sharing program expired in October 1986.

Even though taxes were raised for the first time in 10 years, city officials said the loss of federal funds has forced them to forgo purchasing a new truck for the small public works department and several police cars are being used beyond the time they should have been retired. And Prince George's County had to step in to help finance the police force for 90 days, explained Town Manager Lawrence E. Pierce.

Faced with a population explosion -- the town is expected to grow from 4,000 to 6,000 in the next 18 months -- Capitol Heights officials are joining with other municipalities seeking relief from state coffers.

"The feds paid us normally $11,000 quarterly {in revenue sharing} through the summer of 1986," Pierce said. "As far as expenditures, 5 percent of our budget came from them."

The federal revenue sharing program, which began in 1972, had supplemented many local coffers, and its demise last year has prompted withdrawal pains, especially for those governments that have high unemployment rates or those that are unwilling to raise taxes.

The Maryland Municipal League, an association of 148 towns and cities, asked the Maryland General Assembly to provide funds to the towns and cities so they could continue some of the programs that had been financed with federal dollars. But the request was rejected.

Municipal officials are hopeful that they can win support for a revised plan in Annapolis when the session begins in January.

The new proposal would offer funds to only those governments that could prove they are suffering from the loss of federal funds.

"We realize Maryland can't pay dollar for dollar" what the federal plan paid, said Jon C. Burrell, the league's executive director. "But we'd like a revenue sharing program from the state . . . . We're asking the state to give what they think is fair."

Burrell estimated that Maryland lost between $28 million and $29 million when the revenue sharing program was phased out.

The Municipal League has proposed that state grants be determined by using a formula similar to the old federal plan. This takes into account the per capita income level of residents and other tax considerations so that depressed areas are more likely to receive the aid than more affluent jurisdictions.

"This formula is sensitive to stress situations," Burrell said. "If all the numbers factor out in the end, to say this is one city trying to help itself, this program would work for them."

For cities such as Hagerstown, the program could ease a lot of stress, said Alfred E. Martin, Hagerstown's director of finance.

"The loss of federal funds has put constraints" on city spending, he said. "It made up $550,000 of our annual budget of $10.5 million."

Martin said a town's ability to raise cash is more limited than the state's or federal government's. Hagerstown has not raised taxes since 1982, and he said city officials want to avoid that alternative. The neighboring town of Cumberland raised property taxes by 21 cents, but still fell 9 cents short on its rate of what was needed to offset federal losses, Burrell said.

"We felt we got a lot of bang for our bucks," Martin said. "The federal fund . . . allowed us to look at our own needs and allocate them. Since they've cut it back, I haven't seen the federal deficit get much smaller."

Meanwhile in Frederick, Mayor Ron Young admits projects will progress slowly if the state doesn't intervene financially.

Young is optimistic that Gov. William Donald Schaefer, who originally opposed the proposal, will help.

"He believes in partnerships," Young said. "But we, the town, also have to show a commitment to match state funds with our own."

Young said he had not asked for tax increases because the city's revenue has increased as a result of Frederick's growth.

Burrell insisted that Maryland had the resources to finance the program; he cited the $88 million surplus from the last fiscal year and the $5 million from the recent tax amnesty campaign.

"Towns can raise property tax rates or service fees. But these are the only two ways for them to cope," he said.

"Other than these, they must cut. But where?"

Charles Benton, the state budget secretary, said the league's proposal was under consideration, but did not elaborate.