Democratic mayoral nominee Sharon Pratt Dixon, citing the District's pressing budget problems, said yesterday she opposes a referendum on the Nov. 6 ballot that would restore absolute rights to anyone seeking shelter.

Dixon said at a news conference that there are other ways to deal with the problem of the homeless without spending millions to place homeless families and individuals in city-subsidized hotels and shelters for months.

Maurice T. Turner Jr., the Republican mayoral nominee, also has opposed Referendum 005, saying the city cannot afford to continue unlimited expenditures for the homeless.

"It's going to be expensive. We're facing a deficit and something needs to be done," Lon Walls, Turner's press secretary, said yesterday. "What's being proposed is not acceptable to us."

At a candidates' forum last night in Georgetown, the two mayoral candidates found different origins for the city's apparent racial polarity, with Dixon blaming the Reagan administration's policies and Turner linking the problem to Mayor Marion Barry, his former boss.

Dixon said the country embraced a "different kind of ethic" during the Reagan years, one that emphasized greed at the expense of community spirit.

"It became an era where everybody got caught up in what they got out of the system," Dixon told more than 100 people packed into a meeting room at Christ Church, at 31st and O streets NW. "People stopped reaching out to one another . . . . And I think we you have that kind of ethic, where what matters most is your net worth, it's very difficult to breed and to nurture any notion of real brotherhood."

Turner, however, cited a prominent Democrat, Barry, and his recent trial on drug and perjury charges.

"Yes, this city is divided," Turner said, "and we all know who divided this city . . . . His trial polarized this city, and it was being driven home and reinforced."

To solve the problem, Turner said he would involve churches, political leaders, industry and advisory neighborhood commissions to openly talk about ways to end the polarization, which he called worse than when he was a lieutenant on the police force during the 1968 riots.

The referendum on shelter for the homeless was placed on the general election ballot after activists for the homeless gathered more than 43,000 signatures supporting the measure. If approved by a majority of voters, the referendum would overturn D.C. Council action during the summer that erased a 1984 city law giving any homeless person or homeless family an unconditional right to shelter.

City officials said they spent $35 million last year complying with the unrestricted shelter law -- four times what was spent to implement the law in 1985.

Dixon said yesterday that because of that cost, she would prefer to scrap the referendum and work to place the homeless in vacant housing units or in programs managed by local nonprofit organizations.

"These are the groups that we have to turn to," Dixon said. "We have too much talent out there for us to end up engaged in the manner we have been."

Dixon said she sympathizes with the "compassionate" spirit of referendum backers, but believes its approval would overburden the D.C. budget because the city would remain under court order to provide unlimited shelter at any cost.

"The problem is that too much prerogative rests with the courts -- that's a mistake," Dixon said during an afternoon gathering convened by a community coalition opposing Referendum 005.

Dixon's stance yesterday dismayed the advocates for the homeless who support Referendum 005. Susie Sinclair-Smith, director of the Washington Legal Clinic for the Homeless, said approval of the referendum would not necessarily result in exorbitant cost -- or court orders -- if the next mayor manages shelters properly.

"Opposing the referendum is only going to put more people on the street," Sinclair-Smith said. "She is not taking a thorough perspective on this."

Advocates for the homeless began circulating petitions in support of the referendum in August, shortly after council action to restrict the shelter law, known as Initiative 17.

Those amendments, which were passed to save money, provide government services for shelter residents, including counseling for substance abuse and help in finding jobs and housing. But shelter residents who do not enroll their children in school, refuse employment or reject permanent housing can be turned away.

The amendments also limit stays in shelter to 30 days for single adults and 90 days for families. Voting "no" for Referendum 005 will keep those limits in place; voting "yes" will removes them and restore the broader guarantees of overnight shelter that Initiative 17 provides.