A panel of D.C. civic leaders called yesterday for major changes in the way the city government operates and spends its money, and offered several proposals aimed at getting the federal government and suburbanites to assume larger shares of the cost.

Without passing judgment on the level of most services and programs provided in the District's $3.8 billion annual budget, the commission headed by Alice M. Rivlin concluded that police, public health and scores of other services can be provided in a far more cost-effective way, using substantially fewer workers.

"The most urgent task facing the new D.C. government is to get the District's own house in order by improving efficiency and redirecting spending to delivery of urgently needed services," the commission said in a report released at the Brookings Institution.

The proposals -- including the elimination of 6,000 jobs and cancellation of plans to add 1,000 police officers approved by Congress -- drew an immediate round of criticisms from labor leaders and community activists.

The reaction illustrates the obstacles facing Mayor-Elect Sharon Pratt Dixon and the D.C. Council in grappling with the city's projected $200 million budget deficit.

The plan also would require the cooperation of Congress and the Bush administration, which are being asked either to lift the prohibition on the District's taxing commuters or to increase dramatically the federal payment to the city in lieu of taxes. That payment has remained constant for five years at $430 million.

Congress also would have to sign off on the commission's proposal to shrink the police force, only a year after it voted to order the city to hire 1,000 more officers to combat the escalating drug-related violence.

"I think all of this will be equally difficult to implement," John A. Wilson, D.C. Council chairman-elect, said of the commission report. "It will be difficult to get a consensus on about 90 percent of it. You can pick any recommendation -- it has a constituency."

Wilson also said the commission's recommendations do not help the city address its most pressing financial need: balancing the budget in the current fiscal year, with officials projecting a deficit of nearly $200 million. "The immediate problem is how you get to 1992," he said.

The commission's mandate was to develop a long-range financial plan for the city for fiscal years 1992 to 1996, but the group offered no recommendations on how to balance the budget this year.

Dixon, who is vacationing until tomorrow at an undisclosed location, was unavailable for comment. Vernon E. Jordan Jr., chairman of her transition team, said it is "inconceivable to me that the report not be extraordinarily important both to the transition team and the administration once she is in office."

One top Dixon aide, who asked not to be identified, said that despite the detail in the commission's report, Dixon remains committed to carrying out her own management audit of the D.C. government to determine which employees to cut as part of her proposal to fire 2,000 D.C. workers.

D.C. Mayor Marion Barry, who appointed the members of the commission a year ago, and City Administrator Carol B. Thompson declined to comment yesterday on the commission's work.

Meanwhile, top officials of organized labor, including two who served on the commission, objected to the panel's recommendation that the city make deep cuts in its 48,000-member work force by paying private contractors to do the work.

Overall, about 6,000 positions should be eliminated from the city's work force in the next five years, according to the commission report. That would be achieved through turning to private contractors, eliminating 2,100 duplicative middle-level management jobs and other management changes.

"I believe the report in many cases attempts to solve the mammoth budget problems of the District on the backs of the public employees and the citizens and focuses too little on identifying additional sources of revenue," said Joslyn N. Williams, president of the Metropolitan Area AFL-CIO and a commission member.

Spokesmen for the city's police and firefighters unions criticized the panel's calls to reduce staffing in public safety agencies, including reducing the current police force by 1,605 positions and eliminating one of every five firefighters who currently staff each engine company.

The commission said the District should develop three or four primary care centers to replace the 15 health clinics it operates. It urged the city to reduce its annual payment to the Metro system, in part by eliminating bus service in areas served by Metrorail.

The panel also recommended that the D.C. School of Law be abolished -- drawing immediate opposition from council member Hilda H.M. Mason (Statehood-At Large) -- while calling on the city to reduce funding for its tenant subsidy program and phase out financial support for the Economic Development Finance Corporation and the D.C. Housing Finance Agency.

At a briefing for reporters yesterday, Rivlin, former director of the Congressional Budget Office, and other panel members stressed the gravity of the city's financial condition and the need for fast action.

Without such action, the commission members said, the budget deficit could balloon to $700 million by fiscal 1996.

"The District is facing insolvency if it does not act immediately," Rivlin said. "Our main message is that the District has a very serious problem . . . . It cannot do nothing."

Former U.S. Defense Secretary Robert S. McNamara, another commission member, acknowledged the political difficulty of implementing the panel's recommendations.

"The special interest groups will stand in the way of achieving all this," he said in an interview. "It is incumbent on every citizen that if you don't like the proposal, propose an alternative."

Many commission members agreed that the most controversial proposal is the plan to shrink the police force through attrition, redeployment and abandonment of plans to hire 1,000 new officers.

The commission based its recommendation on criminal justice research indicating little correlation between the size of a city's police force and its crime rate.

The commission also noted that the District has more police officers per capita than any other urban police department in the country, and that the department's manpower is badly deployed, with many police officers filling jobs that civilians could perform.

Under the commission's proposal, the 6,024 authorized positions in the police department would be reduced by 1,605 positions, but the actual numbers of police officers on patrol would not be reduced. Many of the department's authorized positions are not now filled, and the cuts could be achieved by not hiring the additional officers and by not replacing hundreds of officers scheduled to retire in the next few years, the commission estimated.

In addition to not hiring the 1,000 additional officers, more than 500 other positions would be eliminated, primarily from management and administrative areas, such as supervisors for budget and finance, fleet management and communications.

The commission estimated those steps could save the city as much as $64.7 million in fiscal year 1992.

"What we're saying is the truth, and I think someone has to say it," said James J. Fyfe, a commission member and police specialist from American University. "I know we'll be accused of being un-American and failing to have adequate concerns for the citizens, but the fact is the District of Columbia is over-policed . . . . There is no other city that has anything like the police presence we do."

But the commission's proposal drew immediate fire from community activists and representatives of the police union, who argued that crime and violence are likely to rise if the commission's recommendations are implemented. Police Chief Isaac Fulwood Jr. was unavailable for comment yesterday.

Gary Hankins, chairman of the labor committee of the Fraternal Order of Police, said he was "appalled" by the recommendation. "Just as we are beginning to see a couple of small battles won, they want to cut the army," he said. "I can't fathom how they could have reached their conclusion, given what we're facing in this city."

"It just boggles my mind," said Jack Evans, chairman of the Advisory Neighborhood Commission for Dupont Circle. "The commission is living in a fantasy world if they think by cutting police that crime will decrease."

In addition to detailing a range of budget cuts, the Rivlin Commission members asserted that the city needs a big infusion of revenue from the federal government, which it argues has shortchanged the District over the years.

The commission proposed a lifting of the congressional prohibition on taxing suburban Maryland and Virginia residents who work in the city. Depending on the level of taxation, that move would reap the city between $800 million and $1.2 billion annually.

The idea is likely to be heavily opposed by members of the Maryland and Virginia congressional delegations. Although such a tax would not, in theory, directly affect commuters, who would be permitted a credit against their state income tax, it could cost both the Maryland and Virginia state governments millions of dollars annually.

The commission contended that, as a matter of fairness, the city should be allowed to tax commuters, and noted that all other states and many cities are permitted to tax all income earned within their borders.

If Congress is unwilling to permit a commuter tax, it should fix the federal payment at a formula equal to 30 percent of D.C. tax revenue, the commission recommended. That would amount to $760.2 million in fiscal 1992, rising to $975.9 million in 1996, the report said.

Staff writers Mary Ann French, Steve Twomey, Nancy Lewis and Nathan McCall contributed to this report.