ANNAPOLIS, DEC. 11 -- Key leaders of the Maryland General Assembly expressed confidence tonight that they can find ways to balance the tottering state budget without resorting to Gov. William Donald Schaefer's plan to lay off 1,800 workers Jan. 1.

As an alternative, advisers told a meeting of 14 legislative budget leaders they could dig deeper into proposed construction projects and the university system budget, take money from a variety of small funds and consider pay cuts or furloughs to trim $242.6 million from the $11.5 billion state budget.

"I'm feeling more comfortable that we can do it without layoffs," said House Speaker R. Clayton Mitchell Jr. (D-Kent). "The unions will have to work with us, but we can do it."

Added Senate President Thomas V. Mike Miller Jr. (D-Prince George's): "We were all surprised and shocked last week at the number of layoffs that were proposed. With some imagination, I think we can avoid state employees' receiving pink slips over the holidays."

Trying to erase a projected deficit in the current budget, Schaefer announced Thursday that at least 1,800 of the state's nearly 70,000 employees would have to get two-week termination notices and be laid off New Year's Day. Schaefer also asked lawmakers to agree to use a "rainy day" reserve fund and cut other programs.

Schaefer was holding a reception tonight at the governor's mansion here after an emotional Christmas party earlier today at which he discussed layoffs with employees at the Main State Office Building in Baltimore. A spokesman, Paul E. Schurick, said Schaefer would want to know more about lawmakers' proposals for closing the deficit.

"The governor does not enjoy laying off employees, particularly at this time of year," Schurick said. "He would welcome reasonable, valid, acceptable solutions to avoid that."

Legislative leaders hope to present their own budget-cutting plan to Schaefer by the end of the week.

Lawmakers seemed generally to agree with Schaefer's plans to use part of the reserve fund and divert some money set aside for transportation projects and the purchase of parkland. They also seem likely to recommend abandoning the Rocky Gap golf course project in Western Maryland and taking construction money away from the Ocean City beach maintenance program.

William S. Ratchford, the General Assembly's chief fiscal adviser, said money from a variety of housing and economic development loan programs could be used to free $21.5 million this year.

The legislative leaders remained divided over Schaefer's proposal to reduce aid to local governments by $32.9 million. Noting that county governments in the Washington suburbs already have deficits of their own, many lawmakers said they don't want to add to the local fiscal woes. Others asked why state employees should be laid off to help protect local government jobs.

As for the state workers, Ratchford said $36.8 million could be saved by furloughing workers one day a month through June.

"It's a far better idea than permanent layoffs," Mitchell responded.

"It's better than being laid off, if you're the person laid off," added Sen. Laurence Levitan (D-Montgomery), chairman of the Budget and Taxation Committee.

Ratchford warned that many of the proposals are "very much a short-term fix."

With sales and income tax receipts tumbling, Maryland's state budget is expected to be even leaner in the year that begins July 1. Yet legislators praised Ratchford for identifying dozens of ways the state could save money in the meantime and keep the budget in balance.

"One thing about a tight budget: You find out where the money is," said Sen. James C. Simpson (D-Charles).