Maryland Gov. Marvin Mandel asked the General Assembly for an increase of 1 percentage point in the state sales tax, the first major state tax increase proposal in eight years.

The governor's proposal, if approved by the General Assembly, would raise the sales tax from 4 per cent to 5 per cent and would cost a family earning $13,000 about $36 additional annually, according to a state study.

It would help balance Mandel's proposed $3.9 billion budget, up from the $3.5 billion in the current fiscal year.

"We are living on the dark side of affluence, an era of plenty but still not enough," Mandel said in his annual state-of-the-state address to the Maryland General Assembly, a speech marked by an unusual conservative tone and references to his own problems with his pending retrial on political corruption charges.

The governor proposed no new state programs but several modifications of existing state laws. Among those proposals were:

Abolition of the indeterminate sentence under which some prisoners are held at Patuxent Institution in Jessup until pronounced "cured" by staff psychiatrists.

Reinstatement of the death penalty.

A search for "a constitutional way of stablizing both property assessments and local property tax increases. No citizen, especially those on fixed incomes, should be priced out of his house by the tax asessor," Mandel said.

Mandel's proposed fiscal 1978 budget, also released today, contains measures designed to address the chronic overcrowding in Maryland's prisons, a situation that state and local officials regard as a crisis.

Of $92 million Mandel recommends spending on construction projects other than schools, $50 million is targeted for prison construction. Included in Mandel's prison program are proposals to convert a low security corrections camp at Jessup into a medium security prison, construction of a 500-bed annex at the House of Corrections at Jessup, and conversion of an old can factory in Baltimore into a prison for 890 inmates.

To try to reduce the number of people entering the prison system, the budget recommends personnal increases for the state's Parole and Probation Department. Mandel would spend $11.1 million (7.3 per cent more than this year (on the department,) using most of the additional money to crate 78 jobs.

Mandel began his speech, as he did last year, with reference to his indictment by U.S. prosecutors on political corruption charges. He said a "sense of duty compels me" to talk about the trial, in which a dozen legislators testified before it was ended in a mistrial Dec. 7.

He told the legislators that "you and the citizens of Maryland have my gratitude and esteem for enduring this with me for neigher assigning guilt nor allowing events to undermined your confidence in the high office I hold - even though the trial that would have cleared my name was thwarted."

He pledged to "pursue justice to the end not only to vindicate myself and clear my own name but also to help re-establish the good name and high purpose of public officials elsewhere."

Mandel was applauded when he responded to a story by columnist Jack Anderson that suggested that without Mandel's knowledge, lawyer Benton Becker was attempting to arrange through the White House some sort of negotiated deal for the governor. (Becker denied this today.)

"I will not bargain or beg," Mandel told the legislators as he denied the report. "I will not petition or grovel. I will fight for my freedom and my honor with every physical and financial resource I have. I will not accept any deals even if offered. I will settle for no less than complete justice, fairness and vindication. This is the American way. It is the only way I know."

Mandel requested the sales tax increase, along with a change in the way state lottery revenues are counted, in order to make up a projected $175.8 million gap between proposed spending and revenue for the fiscal year that begins July 1, 1977.

"No elected official enjoys raising taxes," he said in his state of the state spech. "No citizen likes to pay taxes . . . If we are to meet our legal obligations, if we are to continue expanding worthy programs, if we are to maintain the high level of services our citizens have come to expect, a tax increase not only is necessary but mandatory . . ."

"Every business has raised its prices," Mandel said. "Every landlord has raised his rent, every person offering services has increased his fees. Now inflation has overtaken the state's ability to function adequately within our present fiscal structure."

The sales tax often is criticized as the most regressive form of taxation, since it is assessed without regard to the wealth of the individual paying it.

Maryland officials argue that the Maryland sales tax is less regressive because it exempts food, medicines and drugs, services such as auto repairs, lawyers and beauty parlors and other items on which lower-income people spend a large proportion of their incomes.

Mandel dismissed the most discussed alternative to raising the sales tax, a restructuring and increase of the state income tax. He said this would take far more money from the taxpayers than the state needs this year.

"It's just to complicated," Mandel said in a budget briefing, "and I just don't think we ought to go out looking for more than we need . . . We didn't think this was the right time to even consider reforming the income tax, so that left us with only one major source of revenue" - the sales tax.

If his tax proposal is appproved, Mandel will also have raised enough money to pay for proposals to increase funding for most of the special interest groups whose support is required to pass the tax increase.

There is increased money proposed for the counties and Balitmore city, for community colleges, libraries, public secondary and elementary education, school bus transportation, handicapped childrens programs, welfare recipients, state employees and road construction.

He also said that if the revenue picture brightens when new estimates are received in March he will propose that additional money from the sales tax increase be returned to taxpayers through some sort of rebate or tax credit.

The tax increase does offer advantages for a few groups. State employees would receive pay raises (from 3 per cent to 6 per cent) totaling $31 million. State police officers, who have complained that their pay is not as high as that for policemen in some of the subdivisions, would receive a larger raise: 10 per cent in the two lowest grades and 8 per cent in other grades.

Over $6 million would be spent during the next two years to reimburse local subdivisions for the cost of housing about 1,100 inmates who should be in state prisons but are in local jails because the state has no room for them.

About $7 million in new highway funds would flow to the subdivisions, $297 million would be allocated for aid to education in the local jurisdictions and a 5 per cent increase would be granted to people receiving Aid to Families with Dependent Children.

Most of the money is needed to deal with uncontrollable demands on state resources, he said. "The increases for personnel benefits - pensions, Social Security, health insurance and the pay raise - total almost $98 million alone," Mandel said in his budget briefing.

His state-of-the-state speech also dealt with the money situation, although his language was reminiscent of California Gov. Jerry Brown's.

There is "a stern realism sweeping America," Mandel said, in which citizens have learned that "all wants, needs and desires cannot be met or satisfied by the limitless bounty of federal dollars . . . The people of America are yearning and groping desperately for a return to basics, a way of life rooted in the fundamentals of family, jobs, decency - a sense of community, a sense of belonging."

Past Mandel speeches often have berated the federal government for not providing enough money for Maryland.

The Patuxent Institution proposal to obolish "indetermine" sentences - represents Mandel's first concession to the many critics of that penal facility. Often described as a "Clockwork Orange" operation, Patuxent has been attacked as cruel, unfair and unworkable and defended as a worthwhile experience. An inmate judged to be a "defective delinquent" can remain in Patuxent for years even if his only crime entails a six-month sentence.

in his state of the state speech, Mandel said Patuxent would remain a semiautonomous facility with psychiatric treatment "to help only those who can and want to be helped."

Inmates who show no possibility of rehabilitation would be returned to the regular prison system to serve a regular prison system to serve a regular sentence under Mandel's proposal.

Most of the overwhelmingly Democratic legislature appeared to support Democrat Mandel's tax increase proposal. Senate President Steny H. Hoyer (D-Prince George's) called the speech a "valid statement to the fiscal problems confronting us," adding that the General Assembly probably cannot avoid a tax increase.

Del. John Hanson Briscoe (D.-St., Mary's Speaker of the House of Delegates, said the public has been "warned and geared up for" a tax increase.

Some Republican leaders were less agreeable, Sen. Edward P. Thomas (R-Western Md., said he was "not prepared to go for a tax increase" until he studies possible budget cuts.