ANNAPOLIS, MARCH 4 -- The Senate Budget and Taxation Committee canceled retroactive pay increases for Maryland Gov. William Donald Schaefer's staff today, but appeared ready to make slightly more palatable to the governor the legislature's compromise on Schaefer's prized light rail proposal.

The committee put the finishing touches on nearly $100 million of cuts in Schaefer's $9.8 billion budget. And while that represents only about 1 percent of the Schaefer proposals, many of the cuts came in programs dear to the governor.

In addition to the action on the raises for Schaefer's personal staff, the committee slashed his proposal for salary increases that would have made some of his Cabinet secretaries and department heads among the highest paid in the nation.

In earlier action, the committee cut $15 million from the $20 million fund Schaefer wanted to create to lure and retain businesses; struck a proposed $10 million contingency fund and removed $13.3 million when Senate committees killed Schaefer's idea of a residential high school for gifted math and science students.

But the committee appeared more conciliatory about adding money to an agreement that legislative leaders made on Schaefer's proposal for a $290 million light rail project linking downtown Baltimore with Anne Arundel and Baltimore counties. The compromise says that the administration can spend only $10 million of the $43 million appropriated next year for the project until it completes a statewide light rail study and financing plan.

Transportation Secretary Richard Trainor says an additional $4 million for the purchase of cars is necessary if the project is to be completed by the 1991 deadline Schaefer has set.

Committee members had demanded that Trainor appear before them to commit to beginning the project no matter the level of funding, but instead Lt. Gov. Melvin A. Steinberg did most of the talking. He met with committee members in private, and then publicly called upon them to add the money and forget the recent stormy relations between the administration and the General Assembly.

"If you want to resolve a problem, you've got to forget about who's at fault," Steinberg said. He said that when he agreed to the compromise, he was unaware that the absence of the $4 million would mean a delay in the project.

It will be up to legislative leaders whether to add the money, and one key player, Senate President Thomas V. Mike Miller (D-Prince George's), is out of town. But Sen. Julian L. Lapides (D-Baltimore) said the delay in adding the money was only a courtesy to Miller.

"Everybody knows we're going to put the $4 million back," Lapides said. " . . . We had to stroke the governor. We have to stroke the {Senate} president."

The committee didn't stroke the governor, though, in turning down his request for raises for his staff. Schaefer infuriated legislators earlier in the session when they learned he had authorized pay raises amounting to about $170,000 to 62 members of his staff even though there was no money in the budget for it.

In deciding not to approve the increases, panel members said a request for pay raises for the Cabinet was out of line. Under Schaefer's plan, the secretaries for health, public safety, transportation, economic development, budget and the school superintendent would have made more than $101,000.

The panel decided that the highest Cabinet salary should be $90,000, and that the school superintendent and secretary of budget should receive $85,000, along with other secretaries in the "second tier." A third tier of Cabinet officials should receive $80,000, they decided.

Schaefer raised the pay of the secretaries of economic development, transportation and public safety to $97,400 last year, and the committee decided the salaries should remain at that level for those three men. But if they leave state government, their replacements would be hired at $90,000.