The minimum Metro bus and rail fare would increase from 85 cents to $1 on July 1 under a transit system budget for the coming fiscal year proposed yesterday.

The 18 percent increase would be the first since July 1989, and the biggest increase in the minimum fare since the rail system began operating in 1976. Fares for other trips also would change, but the amounts would be determined later.

Metro board members expect a fare increase to be unpopular with riders, and transit system officials predicted that about 5 percent fewer riders would use the trains and buses as a result.

"Any increase is not desirable," said board Chairman Mary Margaret Whipple of Arlington. "I would hope that it would still seem to the rider that he's getting very good value for the money. Compared to operating an automobile, Metro is still a bargain."

The $668 million budget, proposed by Acting General Manager William A. Boleyn, would put more of the burden for financing the transit system on riders and ease pressure on local governments to provide higher operating subsidies. While the minimum fare would go up 18 percent, subsidies from local governments would rise 3 percent.

The budget, which still must be approved by the Metro board before it takes effect, includes money for the opening in late 1991 of three more Green Line stations in the District between L'Enfant Plaza and Anacostia. They are the Waterfront, Navy Yard and Anacostia stations.

Financed by Metro's current budget are the extension of the Blue Line to Van Dorn Street in Alexandria on June 1 and the opening of the Mount Vernon Square-UDC, Shaw-Howard University and U Street-Cardozo stations on the Green Line in Northwest Washington on May 4.

The new budget, which is unlikely to be changed substantially by the board before it is approved in the spring, is one of Metro's leanest in years, reflecting the regional transit agency's struggle to cope with rising fuel costs and lower revenue from falling ridership.

The local governments that support the system through subsidies also are having money troubles because of the slumping economy. Responding to the Metro board's pressure to hold down the increase in operating subsidies, Boleyn drew up a budget that would put more of the burden on riders, who each day account for a million bus and rail trips.

Boleyn said the proposed budget would change the balance between taxpayer-supported local government contributions and transit riders "so that the people who directly benefit from transit service will pay a slightly larger share of the costs."

Fare increases have been discussed this fall and winter by the transit board, with members generally agreeing that Metro will need permanent, annual increases starting this year to deal with future money problems of the aging system. The board represents the local governments that subsidize the transit system because fares do not cover all the costs.

Yesterday was the first time board members were presented with a specific figure for a fare increase, and they generally backed the 18 percent increase while acknowledging that it would make Metro riders unhappy.

From 1984 to 1989, Boleyn said, Metro passengers had no fare increase. In 1989, when the base fare rose a nickel, the increase did not begin to cover cost increases in labor, parts and material, he said. In the five-year period, transit operating costs went up by 57 percent while local government subsidies rose 45 percent and fares by 7 percent.

Boleyn and other Metro officials acknowledged that although the number of Metro riders will increase this year because of the new stations, the area's economic downturn and the fare increase will drive away passengers, meaning that the number of bus and rail trips probably will be unchanged from the current budget year.

Sagging ridership and rising diesel fuel costs contributed to Metro's current budget problem, a $12.5 million deficit that had to be made up in part by cutting jobs through attrition.

Many of the cost-cutting steps taken last month would continue in the new budget. Metro would add 137 jobs because of new station openings, but would trim 119 jobs as part of the hiring freeze that began last month.

The $668 million budget is about 9 percent higher than this year's budget, primarily a reflection of increased costs for diesel fuel stemming from the Persian Gulf crisis, the addition of new stations and federal clean-air requirements.

Of the nearly $52 million increase in costs, Boleyn said, revenue from the fare increase would cover about $38 million, the increase in local government contributions about $8 million, and the rest would come from normal growth in other revenue.

Overall revenue is expected to be about $343 million. Local governments would pay $284 million in subsidies, up from $276 million this year. The District, which uses most Metro's bus service, probably would be billed about $128 million for subsidies, Maryland local governments about $82 million and Virginia local governments about $74 million.

The 3 percent increase in local government contributions -- lower than the expected inflation rate -- was supported enthusiastically by board members from the District, Maryland and Virginia yesterday.

As a further sign that Metro is increasing the burden on its riders, officials said, rail fares would cover about 81 cents of every dollar spent on subway operations in the new budget, while bus fares would cover about 33 cents of every dollar of bus costs. The average of the two means that Metro would recover about 56 percent of its costs from riders, the highest in its history.