The House Appropriations subcommittee on the District approved the city's $3.5 billion budget for fiscal 1991 yesterday and added $23 million in federal funds to finance repairs for public school buildings, care for indigent patients at D.C. General Hospital and several other initiatives.

The panel also voted to restore the city's right to spend local tax dollars on Medicaid-funded abortions. The full House voted last year to permit local funding of abortions, but that action was vetoed by President Bush and congressional officials expect the same thing to happen again this year.

"Hope springs eternal," said Rep. Julian C. Dixon (D-Calif.), the subcommittee chairman and a supporter of abortion rights.

However, he said it is "not realistic" to expect that Bush would allow the abortion measure to pass into law.

Dixon said that $5 million in new funds for D.C. General and $3 million for Children's Hospital would help improve the health care delivery system in the city, which he described as reaching the breaking point because of the cost of treating uninsured patients.

D.C. Board of Education officials had sought $46 million in additional federal funds, but the subcommittee voted only $12 million for the schools -- $10 million for school repairs and $2 million to improve recreational facilities for children.

"I think the schools have been shortchanged," Dixon said, but he added, "Money isn't the sole problem."

All the measures in the budget bill approved yesterday now go to the full Appropriations Committee next week and probably will reach the House floor before the end of the month. The Senate is expected to take up the city's budget after the August recess.

The funds are for the fiscal year that begins Oct. 1 and would not provide immediate financial relief for the city, which faces a $95 million budget deficit in fiscal 1990.

Meanwhile, city officials and union leaders announced that they have reached a tentative agreement on a stop-gap labor contract that would give 18,000 city workers a 2 percent pay increase next year, while postponing a longer labor agreement until after the fall elections.

Under the proposed contract, which must be ratified by the seven unions involved, workers would also get a 1 percent lump-sum bonus at Christmas.

Eddie Kornegay, president of Teamsters Local 1714, representing local Corrections Department workers, said the agreement was necessary because of the "tremendous volatility" of politics in the city.

"It would have been awful hard to negotiate a contract while the mayor is down at federal court," Kornegay said.

During budget deliberations yesterday, the subcommittee engaged in the annual congressional practice of using the appropriations process to alter city laws.

The subcommittee voted to exempt D.C. government attorneys from the current requirement that they live in the city -- a move that members said was justified because the District was having difficulty hiring lawyers.

At the same time, the subcommittee acted to remove Congress from another contentious local issue: the removal of suicide barriers at the Duke Ellington Memorial Bridge over Rock Creek Park.

Local residents have lobbied for years to take down the barriers, arguing that they were intended to be temporary and did not prevent suicides. After numerous community meetings and legal wrangling over the issue, Mayor Marion Barry ordered the barriers to come down.

But a group headed by former State Department official Benjamin H. Read, whose daughter committed suicide at the bridge in 1979, successfully lobbied Congress in May to adopt special language limiting funding for the removal project until the city justified the action. The subcommittee voted to allow the city to go ahead with the removal.