Mayor Anthony A. Williams proposed closing 12 public pools, trimming the affordable housing fund and freezing the salaries of city workers yesterday as part of $231 million in budget savings over the next two years.

The package, which was presented to the D.C. Council in a closed-door session, also included $35 million worth of possible increases next year in taxes on meals, hotel rooms and parking.

Williams (D) and his deputies have spent the last three weeks reviewing government operations in search of cuts to fix the current $5.6 billion budget, which is projected to be out of balance by $127 million this year and $129 million next year. They largely spared the schools and public safety.

"Once the revenues continued to drop, we knew we had a major problem," said City Administrator John A. Koskinen, who oversaw the review, which ranked the importance of services and sought to protect the most vital ones.

The dozens of resulting cuts would range across the government. Yesterday's proposal amounted to a first negotiating session with the council as Williams prepares his formal budget presentation March 17. The council review begins after that, but administration officials hope to prevent confrontation by discussing many details first.

Recreation programs are emerging as a flash point. The Williams proposal would suspend operations at eight of the city's 77 recreation centers and 12 of the 22 school-based recreation programs. Ten of the 41 outdoor pools would close, as would two indoor ones.

Administration officials said they sought to target recreation centers and pools for closure that are near similar facilities, and they vowed to spruce up the surviving ones.

Also controversial is the mayor's plan to hold funding for the housing production trust fund steady at $15 million next year, saving $5 million that otherwise would go to it. An interim disability assistance program would be suspended at a savings of $4.9 million. City workers would lose $18.4 million in planned step raises, and non-unionized workers would lose $12.2 million in planned raises as well.

There are no employee furloughs, but Koskinen predicted that some layoffs would result from the plan and that many other job openings would go unfilled. When Williams and the council closed a $323 million budget gap in October, 400 jobs were eliminated.

The school system must realize $33.4 million in promised savings from revamping its special education programs. Charter schools are slated to return $12 million because of enrollment changes.

Williams's proposal does include $35.6 million of new spending, but officials said it is necessary to maintain existing services. Federal literacy funding worth $3.2 million, for example, is set to expire; the mayor proposed replacing it with city funding.

Council members reacted soberly to the presentation.

"We are facing some very difficult decisions," said council member Jack Evans (D-Ward 2), chairman of the Finance and Revenue Committee, who praised Williams for presenting a list of options before making a final budget proposal. "What the mayor is proposing is very draconian, and we're going to look hard at it."

Council Chairman Linda W. Cropp (D) said, "The mayor is moving in the right direction. . . . Everything is on the table."

Some council members expressed an interest in possibly tapping the city's reserve funds or seeking permission from Congress to reduce the unusually large cash balance that the D.C. government is required to keep.

Chief Financial Officer Natwar M. Gandhi said the cash reserves help provide fiscal stability and bolster the city's case for improving its bond rating, which would lower borrowing costs.

Without a congressionally approved change to reserve requirements, any money taken from cash reserves would have to be repaid next year.

"At this point, I don't think it would be advisable to touch the cash reserves or the fund balance," Gandhi said.