THE WORK on any one city budget takes about 30 months and overlaps from budget to budget. The result is confusion. President Carter has tried to remedy some of the problem by proposing two procedural changes: first, that the federal payment to the city be sent for two years in advance instead of one year and, second, that the payment be set at a percentage of the amount the city raises in local taxes. Both steps would help to take some of the guesswork out of the budget process. b

Members of Congress could be equally helpful in eliminating some of the confusion. Ideally, they could remove themselves from the budget process altogether; officials elected by local citizens should set the priorities for the use of city tax dollars. But short of that, Congress could stop its line-by-line review of the city budget and simple decide the amount of the federal payment and the total amount that the city government is authorized to spend in any one year.

The city government could also improve the way it handles the budget. For instance, millions of dollars the city receives in grants are not included in the budget. This was cited as a major problem in 1976 when Arthur Andersen & Co., an auditing firm, reviewed the city's financial management. The city council never votes on how the grants should be used: in the 1981 fiscal year there will be no review of $440 million in grant monies going into the city treasury.Council members Betty Anne Kane and Charlene Drew Jarvis introduced legislation last year to include grants in the city's budgeting process. Neither the council bill nor the Andersen report has been acted on. Now is the time to do so. Without some public review of the grants, under which priorities for their use are set by the mayor or council, the money can be wasted.

The city should also begin regular reviews of its financial status so that city leaders know if revenues are coming in as expected, how close to the budget the city is operating and how much money, if any, the city has had to borrow. As it stands, the budget is a bag of mysteries and tricks. Now that the federal government is moving to improve its handling of the District budget, city officials should do the same.