Mayor Anthony A. Williams and D.C. Council members tentatively agreed yesterday on a plan to pay for $9.9 million in bonuses to thousands of unionized city employees, and lamenting last week's rhetorical rumble over the issue, they called a truce.

The compromise plan, put forward by Williams, involves borrowing money from the city's share of the tobacco settlement, using interest income on accounts held by the D.C. financial control board and reallocating city agency funds. The money will be used to pay $1,700 bonuses to 5,807 unionized D.C. employees no later than Monday.

D.C. Council approval of the plan--possibly as soon as today--would allow Williams (D) to save face with union workers, to whom he had promised to give the bonuses by tomorrow as a reward for their giving up pay increases during the city's recent financial crisis. The city now has a budget surplus, which under the current labor contract requires bonuses to be paid.

Resolving the issue also would help the first-year mayor mend some of his political differences with council members who last week angrily rejected his plan to fund the bonuses solely by borrowing tobacco settlement money.

Council members called Williams's initial proposal fiscally unsound and were annoyed that he had not given them much time to consider it. Williams fired back that their rejection largely reflected political rivalries between himself and some council members.

There weren't exactly any apologies yesterday, said council members who attended the meeting. Instead, each side admitted that last week's debate got too ugly and promised to embrace a new spirit of cooperation. A similar reconciliation occurred last spring, after the mayor and council clashed on the council's plan for a big tax cut and on other parts of this fiscal year's budget.

"We all need to tone down the level of rhetoric," Williams said, acknowledging that the plan he submitted to the council last week was vague. "The council doesn't like to get things at the last minute."

"Communications is the key to better relations," added council member Jack Evans (D-Ward 2), one of four council members who ran against Williams last year.

No vote was taken during a two-hour private meeting of the council and Williams, but council members said they would take up the mayor's proposal today if he answered several questions about his plan. If the council approves the plan, and the control board says it can be done without throwing the city's budget off balance, most of the checks could be cut by Friday.

"I believe we have an understanding on the broad outline" of the bonus-funding plan, Williams said after the meeting. "It's going to get done."

Council members said the proposed agreement addresses the concerns that prompted them to vote down the plan Williams offered last week: It mandates that the extra pay come out of the current fiscal year's budget and specifies how the city will repay the tobacco settlement fund. The city is scheduled to receive about $1.2 billion over 25 years under the national settlement with tobacco companies.

"At the council meeting, we were essentially saying, 'Show us the money,' and so today, he and [chief financial officer] Valerie Holt did," said council member Sharon Ambrose (D-Ward 6), who last week was one of the harshest critics of Williams's plan. "I think everybody's pleased it all worked out . . . which could have been done before."

Council member Jim Graham (D-Ward 1), who said he had been lobbied by health care advocates to reject the mayor's initial request to use tobacco funds, said he was "a great deal more comfortable" with the new plan. D.C. officials have said they would use the money only for health-related programs, such as anti-smoking efforts.

"The difference is there is an assurance that the money will be paid back and paid back in a very limited time frame," Graham said.

After a briefing by Williams's staff, labor leaders said they were optimistic that the union employees eligible for the bonuses would receive them soon.

"It looks good. There seems to be broad agreement," said David Schlein, national vice president of the American Federation of Government Employees.

Since agreeing to the bonuses last month, the Williams administration has had trouble finding the money to pay for them. The council's rejection of the tobacco settlement option last week left the mayor with no obvious alternative.

Yesterday, Williams told the council that he still needs to borrow $4.2 million of the $9.9 million bonus money from the tobacco settlement but that he would repay it early next year. Council members said they told him pointedly that they could not accept Williams's proposal unless he tells them by today when the borrowed money would be repaid. "We'll be comfortable when we know that date," Evans said.

The money advanced from the tobacco settlement would be repaid using some savings from the city's lower-than-expected water bill and money saved on borrowing costs, Williams said. The District had approved $20 million for its payment to the D.C. Water and Sewer Authority, but the figure later was revised to $9 million.

To cover the rest of the $9.9 million, Williams recommended taking $3.5 million in federal and D.C. money allocated to city agencies in the current fiscal year. The mayor said he did not believe his proposal would seriously threaten any city programs or result in layoffs.

Another $2.2 million would come from interest earned on city money that the federal government deposits into control board accounts before the money is directed to city programs. Francis Smith, the control board's executive director, said the authority had no plans for how that money would have been spent.

Staff writer Michael H. Cottman contributed to this report.

CAPTION: "We all need to tone down the level of rhetoric," Mayor Anthony A. Williams said after reaching a tentative agreement with the D.C. Council on paying for employee bonuses.