ANNAPOLIS -- With a year of practice under its belt, the Maryland General Assembly comes to town Wednesday to take up a diverse legislative agenda dictated almost entirely by Gov. William Donald Schaefer, the state's demanding chief executive.

At the top of Schaefer's list of priorities for this year's 90-day legislative session are social issues, including more day care programs, expanded community-based care for the mentally ill and an overhauled system of governance for the state's public colleges and universities.

Schaefer, who is beginning his second year as governor after 15 years as the bricks-and-mortar mayor of Baltimore, also has proposed at least one ambitious new public works project -- a $290 million light rail system for the Baltimore area.

And he is pressing for long-range legislation to begin work on such intractable problems as pollution of the Chesapeake Bay, the state's overburdened prison system and the Port of Baltimore's loss of competitive edge.

The mood in Annapolis this year promises to contrast with the near-chaos that marked parts of last year's session, when a new group of 188 lawmakers, including a new Senate president and House speaker, spent much of the three months matching wits with the rookie governor.

Schaefer's wish list this year is far less ambitious, and, after months of stepping on each other's toes, the governor and legislative leaders seem finally to have grown accustomed to their roles in the State House.

There are a few political question marks lingering, however, such as the futures of rambunctious Lt. Gov. Melvin A. Steinberg and House Speaker R. Clayton Mitchell, who never solidified his control of the 141-member House last year.

The legislature demonstrated last year that it endorses Schaefer's sponsorship of aggressive economic development and large-scale public works projects.

But legislators are likely to be busy once again trying to protect their turf from a governor anxious to enlarge his spending powers.

One of Schaefer's most controversial proposals would give him up to $20 million to use at his discretion to woo business. House Speaker R. Clayton Mitchell (D-Kent) said legislators, who generally view Schaefer as a big spender, are wary of giving up fiscal oversight.

"The legislature is not going to be caught on the outside looking in," said Mitchell.

But he predicted a smoother session than the one last year, when the new governor inundated the General Assembly with one major proposal after another, from an income tax increase to an expensive new sports stadium complex.

The legislature, which prided itself on its power and independence during the eight-year administration of Gov. Harry Hughes, reverted last year to its more traditional role of largely reacting to gubernatorial proposals, in most cases approving them.

The same pattern appears to be shaping up this year, despite predictions from leaders that they would have an agenda of their own in 1988.

Senate President Thomas V. Mike Miller (D-Prince George's), Schaefer's most vocal legislative critic, forsees continued parochial rivalry between Schaefer and Washington area legislators, who worry that their constituents are being shortchanged in the governor's higher-education and transportation proposals.

Miller contends that Schaefer remains unabashedly partial to Baltimore. "He doesn't see the need for

subtlety in taking money from state coffers for Baltimore," said Miller.

The education issue has already been the subject of months of intense debate among legislators and educators throughout the state.

Although Maryland's 11-year-old system of college governance is widely regarded as unwieldy and inefficient, proposals to change it have drawn vehement opposition from factions of educators, including some in College Park, who fear that their schools would lose money, prestige, a distinct identity or political influence.

The dispute has extended to Schaefer and Steinberg. Although the two have sought to play down their differences, they have disagreed openly in recent weeks over whether to cluster all 13 public colleges and universities, now governed by four separate boards, under a single board of regents.

Last week, Schaefer and Steinberg compromised on a legislative proposal. They agreed to push for a single board for all schools except for Morgan State University and St. Mary's College. In addition, they are advocating a new stronger commission to oversee all facets of higher education in Maryland, including private colleges, community colleges and for-profit trade schools.

They say that the changes will improve the quality of the colleges -- which often have been rivals for money, popular academic programs and students -- by making them more efficient and more accountable to the governor.

Another area of controversy is Schaefer's proposal for a light rail system -- essentially a modern version of the trolley -- that would link Anne Arundel and Baltimore counties with the stadium complex to be constructed in downtown Baltimore.

The 27-mile line is proposed for a 1991 opening.

Schaefer and political leaders from that part of the state say the system is necessary and the first step of an innovative mass transit system. But the problem arises over who would pay for it.

While local governments would be required to put up $45 million of the cost, most of the rest would come from state government, specifically from unexpected windfalls from the gasoline tax increase and a boost in motor vehicle registration fees that the General Assembly passed last year.

Some legislators argue that the gas tax money was to be spent for highway and bridge construction, and others say that not all of the extra money raised by the tax increases should be spent on one project.

Some legislators from the Washington suburbs want a commitment for a similar system in part of the state, or a route that links Annapolis to the New Carrollton Metrorail station.

Among the other major issues facing the General Assembly:Math-Science High School. Inspired by a similar venture in North Carolina, since his campaign two years ago Schaefer has said that he wants Maryland to have a public boarding school for 600 sophomores through seniors with unusual talents in math and science. The school would open in 1989, and the favored location is a middle school in Greenbelt.

Schaefer says the school would symbolize Maryland's commitment to new technologies, thus helping to attract high-tech companies to the state.

But the proposal faces critics in the legislature who argue the school would be elitist and too expensive -- costing approximately $13,000 per student annually. They say its estimated total cost of $20 million could be better spent to shore up the caliber of public education around the state, especially in Baltimore. AIDS. The legislature will consider a variety of measures to deal with acquired immune deficiency syndrome. Bills are likely to provide for several types of mandatory testing for the deadly virus, a central reporting system for people with the disease, and the distribution of free syringes to drug addicts to curb the sharing of contaminated needles.

The governor's AIDS advisory council is opposed to widespread mandatory testing but is supporting measures to require testing of sperm donors and to require laboratories to submit monthly reports of the number of people who have tested positive for AIDS to the state's Department of Health and Mental Hygiene.

Schaefer already has said he opposes several more controversial recommendations of his council, including decriminalizing sodomy and giving the state's health secretary permission to distribute needles to addicts. Day Care. Confronted with a financial crisis in state day care subsidies, the legislature will be asked by Schaefer to consider several measures to expand the supply of child care, particularly for poor families.

The governor's budget will include a new loan program to help open new day care centers, and a $2 million increase in the state's subsidy of day care for poor children. Mental Health. Schaefer has pledged to try to improve the quality of psychiatric treatment in Maryland by reducing the crowding of state psychiatric hospitals and increasing community-based services.

Four studies in the past year have concluded that the state's psychiatric services are deficient. They recommended a variety of strategies to improve them, including closing all the state's psychiatric hospitals, improving community-based programs and strengthening mental health services for children. Physician Discipline. Schaefer has said he wants to strengthen the system for disciplining bad doctors in Maryland as part of a larger effort to bring down the cost of medical malpractice insurance premiums.

The governor is expected to meet this week with state Attorney General J. Joseph Curran to decide on a legislative plan, which could include hiring more lawyers and investigators to bring cases against doctors who are incompetent or otherwise unfit. Economic Development Fund. Schaefer wants up to $20 million to spend to persuade businesses to move to Maryland or to keep state businesses from leaving. Schaefer calls it a "sunny day" fund; some legislators call it a "slush fund" and want tight controls on its disbursement. Truck Safety. Concerned about unsafe trucks, the Schaefer administration wants to increase inspections and require owners to maintain trucks regularly. The governor wants to double the number of roadside inspectors, who perform routine and surprise checks. Currently, less than 10 percent of trucks on the state's highways are inspected.

It is unclear whether Schaefer would support legislation requiring trucks to cover their loads, a measure that has failed for the past 20 years under heavy lobbying from the trucking industry. Corporate Directors and Officers. Schaefer has said that the biggest disappointment of last year's legislative session was the rejection of his initiative to limit the liability of directors of corporations. Business leaders have declared that enactment of the legislation would be a barometer of the state's "business climate," and Schaefer has moved to ensure that the bill passes early in the session.

This year, Schaefer proposes to extend the protection to officers of corporations as well as directors. But the new bill addresses some of the objections raised by legislators last year by requiring a vote of stockholders before the limitations could be extended, and by applying the limitations only to suits by the corporation or its stockholders. Suits by third parties would be excluded. Port of Baltimore. Legislators will be asked this year to try to increase the competitiveness of the Port of Baltimore, which has been losing business for several years to rivals along the East Coast, including Norfolk.

To do this, Schaefer wants to give more autonomy to the Maryland Port Administration, an arm of the state's Department of Transportation, by creating a new commission composed of six business executives that would oversee the port's operation. Budget. The good news is that the state has plenty of money -- its expected surplus of $271 million is the largest in seven years. The bad news is that the state's top fiscal experts have warned Schaefer not to spend it all because there could be hard times ahead.

Schaefer has said he will abide by the legislature's self-imposed spending limit, which means an 8.6 percent increase in the state's operating budget.

Budget deliberations usually include a fight on whether the state will liberalize its policy and pay for more abortions for poor women. But Schaefer recently broke his campaign pledge to lead the fight for expanding the program and said he will leave the law as it is. Pro-choice legislators are outraged but acknowledge it would be hard to change the abortion language without the governor's help. Salaries. Schaefer is proposing big raises for the people who work for him, including nearly $25,000 a year for some of his top aides, six of whom would be paid $97,000.

Legislators say such increases may be hard to justify, especially when most state employees will probably be receiving raises of about 4 percent.

Judges. An administration proposal that would eliminate contested elections for circuit court judges is expected to generate lively debate. Proponents of the bill, which has been rejected in past years, say forcing judges to run for election puts them in the awkward position of having to curry favor from the public they judge.

Opponents, including black and Republican legislators, fear that their ranks will not be represented on the bench if judges can no longer be challenged at the polls. Prisons. The Schaefer administration has proposed a comprehensive $330 million, 11-year plan to demolish antiquated prisons and build new facilities around the state, including a minimum-security prerelease center in Prince George's County. Chesapeake Bay. With the bay cleanup agreement signed by Maryland, Virginia, the District and Pennsylvania, environmentalists will be watching how much money Schaefer commits to the program. There have been indications that it will be far less than the $15 million to $20 million that conservation groups advocate.

Related issues, including a proposed ban on phosphates, are expected to arise. Local Issues. Montgomery County's top priority is funding for construction of a $6.6 million classroom building at Shady Grove for the University of Maryland's high-technology center.

Legislators from Prince George's will be seeking more funding for the county's magnet school program and an increase in funds for juvenile service workers in the county.

Anne Arundel legislators, in addition to pushing the light rail line, will be seeking money to expand the county courthouse.

Howard County officials want approval of bills to allow the county to charge fees for weekend prisoners and to charge prisoners who have financial resources or insurance coverage for health care services.

In what promises to be a debate on the sanctity of local control, Howard legislators are gearing up to fight passage of three bills dealing with the care and keeping of vicious dogs, an issue that generated great debate there last summer.

Staff writer Robert Barnes contributed to this report.