D.C. Superior Court leaders budgeted poorly, ignored federal warnings and illegally overspent their 1998 budget by $4.6 million, the General Accounting Office asserted yesterday in a lengthy investigation of courthouse finances.

GAO auditors also concluded that the court spent $773,000 in interest income without required congressional approval and improperly shifted $4.1 million in legal bills from one year to the next.

Although court leaders argued that Superior Court and the D.C. Court of Appeals were innocent victims of federal miscalculations, the GAO asserted that the court should have lived within its 1998 budget, and failed to do so.

"D.C. Courts did not base its spending . . . on the appropriation it received," wrote Gloria L. Jarmon, a senior GAO director. "D.C. Courts' management did not properly execute its responsibility to operate within available resources."

The auditors' report is the second installment in a study ordered by Congress last year after Superior Court ran out of money and stopped paying hundreds of court-appointed lawyers who represent indigent District crime suspects, abused children and the elderly.

A GAO analysis of financial accounts is expected to be released next month, a GAO official said yesterday, with a study of courthouse personnel practices to follow.

The GAO report on "planning and budgeting difficulties" comes one week after Superior Court again stopped paying court-appointed criminal lawyers. Court officials said that the court was underfunded by $8 million and that legal bills were higher than managers had predicted, pushing the court to a $25 million ceiling imposed by Congress.

Last week, dozens of courthouse managers requested a meeting with Court Executive Ulysses B. Hammond and the five-judge committee that oversees the two courts. They said they want to discuss pay and staffing levels, as well as "management and budget accountability."

The GAO report on the 1998 events supports the contention of several members of Congress and the federal government that courthouse leaders were aware of budgetary problems months before they stopped paying the lawyers.

Rather than spend according to its $108 million budget, Jarmon wrote, the court gave employees a discretionary 7 percent pay raise and spent money as though it would receive funds that never came. In April 1998, the Office of Management and Budget warned the court about its rate of spending.

In a 20-page response to a GAO draft, the court's five-judge committee rejected the GAO's conclusions as "unfair and incorrect," arguing that the root of the problem was a budget too small to pay for everything the busy court needed. The judges maintained the pay stoppage was "lawful and undertaken in good faith." They rejected the GAO conclusion that the court was not entitled to spend $773,000 in interest income. And they opposed as unnecessary a GAO recommendation that the court improve its tracking of court-appointed lawyers' bills, some of which have been lost.

"None of the additional information D.C. Courts has offered affects our legal analysis," wrote Jarmon, who said the courts violated a federal law requiring agencies to live within their budgets.

The judicial committee said it has prepared letters for the White House and Congress that "discuss the disagreement between the courts and the GAO." The court denied a request yesterday to make those letters public.