Montgomery County Executive Sidney Kramer, proclaiming the county's success at keeping up with the demands of rapid development, unveiled a $1.6 billion capital improvement budget yesterday that would continue an ambitious program of building schools and roads throughout the county.

At the same time, he outlined an annual growth policy that would allow for more jobs and housing in several areas where limits on development have been in effect.

Taken together, the budget and the growth policy serve as a blueprint for the county's growth, an explosive issue that has dominated Montgomery's political landscape in the past few years.

Kramer's record capital improvement budget, 8 percent higher than the current level of $1.5 billion, is a six-year plan to keep the county and its facilities in pace with a population that has grown by about 17 percent since 1980. High on the list are new schools, all 20 requested by the school board, and road and transit improvements to the tune of $520 million. Kramer said he also plans to improve firefighting and police facilities and to build new libraries and swimming pools in the growing north and midcounty areas.

At a morning news conference, Kramer said his budget "provides for significant improvements" without adding to the county's tax burden or debt.

Outlining where and in what amounts new residential and commercial development can take place, the annual growth policy overlaps with the capital improvement program to provide the county's guidepost for growth. Through the capital improvement budget, the county builds the facilities needed to support development; through the growth policy, it determines whether adequate public facilities are in place and whether new development should be curtailed.

"Although this is only the second year that the county has produced a growth policy," said Kramer, "we are already seeing the benefits of an improved process for looking at fiscal and growth decisions at one and the same time."

The new ceilings contained in the growth policy, which like the capital improvement program must be approved by the County Council, are used by the county Planning Board in approving and rejecting residential and commercial projects.

Kramer's plan sets ceilings that are higher than last year's, largely, he said, because roads now are in place to accommodate more construction.

The county uses road capacity to determine how many "units" of jobs and housing should be allowed. The current countywide capacity is 44,715 units of jobs and housing, while Kramer's growth policy calls for 61,261. Among the areas that would be affected are North Bethesda and Germantown East, planning areas now under building moratoriums that would be permitted new development as a result of new roads.

Kramer pointed out that the proposed ceilings, while higher than last year's, are lower than those that would be allowed if certain development procedures are changed. A county committee that Kramer established last year has proposed new ways of determining the road capacity formula used to guide development.

In what is likely to be a controversial issue before the council, the committee has suggested some revisions to the criteria used. Specifically, the county now judges road capacity based on the first four years of the capital budget; the committee has suggested that certain projects in the fifth and sixth years also be considered.

The practical effect of the change, county officials said, is that the countywide capacity for jobs and housing would be 103,135 units, more than double the current level.

Kramer said he would wait for public comment on the proposal before making a recommendation. The council will hold public hearings on all aspects of the plan and must approve the annual growth plan by June 30 and the Capital Improvement Project by May 15.

Planning Board Chairman Norman Christeller, an ex-officio member of the committee, said the recommended change was offered along with proposals to tighten a loophole in the way that the county administers the adequate public facilities test.

Among the county areas that would continue under building moratoriums no matter what procedure is used are the Bethesda Central Business District and Fairland/White Oak along the Rte. 29 corridor.

There was little reaction yesterday to Kramer's program as Montgomery officialdom, still in the doldrums of post-Christmas week, picked its way through the hundreds of yellow-bound pages. Montgomery school officials, who had highly publicized fiscal battles with Kramer over last year's operating budget, did not receive their full request of $424 million. But yesterday there seemed to be some positive reaction to Kramer's recommendation of $373 million.

Kramer said he was recommending all the new schools favored by the school board, but was deferring the timing for a few. Kramer said his recommendation for new schools, which includes six elementary schools mainly in the northern and western parts of the county, and renovation projects, would result in 23,000 new classroom spaces. Kramer also said that the county should replace Walt Whitman High School in Bethesda rather than renovate it.

Kramer also recommended yesterday that the county set up a special committee to coordinate planning between the county and the municipalities of Rockville, Gaithersburg and Washington Grove, which have separate powers to approve developments.