Mayor Walter E. Washington yesterday proposed a $1.4 billion District of Columbia budget for 1979 that would require increases of an average of 23 per cent in the assessed value of home and businesses in the city over the next two years.

The mayor's budget portrays a city government strapped with financial hardships that will be struggling - sometimes without success - to maintain vital services without cutbacks and layoffs during the fiscal year beginning Oct. 1, 1978. Few new programs are proposed.

The budget released by the mayor yesterday is in many respects an uncertain one. It is still subject to tug of war matches with both City Council and Congress. And, at a time when the city is under tight financial scrutiny on Capitol Hill, it seeks an unprecedented federal payment of $317 million.

The city's property tax rate - $1.83 per $100 of assessed value - would not change, a point which the mayor emphasized in calling this a "no-tax increase" budget. But the financial forecasts in the budget assume that property values will rise by 23 per cent over the next two years and that increase would be reflected in larger property tax bills.

There would, however, be no increases in income tax or sales tax rates or in the fees for auto tags or water and sewer service.

Balancing the budget is based on a variety of money raising projections, some of which may not be realized. A federal payment of $317 million, for example, would require new federal legislation and a change in mind by congressional leaders, who so far have been unwilling to grant the District anywhere near the amount the mayor has requested in the 1979 budget.

If this money making mechanism is not granted by Congress the city may be forced either to reduce services or increase taxes or user fees to balance the budget.

The 1979 budget is being proposed while Congress is still debating a $1.4 billion budget for the 1978 fiscal year - which begins next month. Thus final action on the budget proposed yesterday may not come until late next year.

The 1979 budget includes several fund raising mechanisms that are likely to affect a wide number of people. In an effort to raise $20 million more for the city's general fund, parking violators will have to pay a $25 booting fee and $50 towing fee - both services are now free - and car impoundment fees will be increased from 50 cents to $3 per day.

Parking violators will also stand a greater risk of being caught, since the city will hire 75 persons whose responsibilities will only be to write tickets and place boots. In addition, 1,200 more parking meters will be installed, most of them in the downtown area.

The city will be making a significant amount of new allocations to increase educational opportunities in public schools for children who are physically handicapped or mentally retarded. Cost of living increases will be provided for city employees as well as those on public welfare.

But in other areas where there is frequent criticism of slow processing Rights and the office that overseas the rent control program, for example - no staff persons are being added. The city's corrections department, which is under court pressure to maintain secure conditions at Lorton Reformatory, would have its staff reduced by more than 100 persons under the mayor's budget.

Some of the controversial service cuts in other proposed budgets are not present in this one. Residential trash collection would remain on its twice-a-week schedule, there would be no reductions in street and alley cleaning and the city would not be forced to resume its system of rotating closings at fire stations.

The mayor's separate $129.8 million capital improvements program, which was also represented yesterday includes $15 million to renovate two city high schools - Eastern High and the Duke Ellington School for the Performing Arts. The city is also asking for $28 million to construct a new water treatment plant at McMillan Reservoir to replace the present one, which is 70-years old.

The capital budget also includes $49 million to finance the first stages of construction for a proposed $110 million convention center near Mount Vernon Square in downtown Washington.

The project may not get that far, however. Last week, a Senate appropriations subcommittee voted to eliminate $27.7 million in start-up costs for the project. If that decision is not reversed, the convention project would be stalled.

The city expects to receive 22.4 per cent more in income from property taxes in 1979 ($207.6 million) than in 1978 ($169.6 million.) Most of that increase will be derived from higher property tax payments by homeowners and businesses.

The rest of that increase will come from a frequently used municipal financing maneuver that will switch the payment dates for about 100 large firms in the city who each pay more than $100,000 a year in property taxes.

The large firms, instead of paying part of their 1979 taxes in 1979 and aprt in 1980, as is currently done, would pay all of the taxes in 1979. That would give the city a one-time windfall of $15 million in property tax revenues.

The same payment change plan was to have been used to help balance the 1978 budget, but the mayor is now asking that it be postponed for a year to avoid "cash flow problems" for the big businesses. The 1978 budget will still be balanced because other revenue collections are running ahead of projections, city finance officials said.

Of the remaining $23 million in additional tax revenues, the bulk will come from increases in regular tax payments.

In 1979, the city will switch from its current system of reassessing property every other year to an annual assessment plan. Eleven assessors are being added to help get the job done.

A finance department spokesman said yesterday that the department projects an average increase of 15 per cent in real estate values in the city between July 1, 1978, and June 30, 1979, and an 8 per cent increase during the following 12 months.

Even though the city has recently enacted a plan that exempts the first $6,000 of assessed value from most residential property bills, the end result of the increased assessments will, in most cases, mean larger tax bills in 1979 than in 1978.

The plan to step up enforcement of the city's parking law was first outlined in April by Transportation Director Douglas N. Schneider Jr. It is expected to raise an additional $20 million, of which the city believes $13 million will go into the general fund.

As a result of adding the civilian ticket writing and booting squads and hiring a fleet of privately-owned trucks to tow away illegally parked cars, the city will institute a new system of decriminalizing parking violations.

Current traffic disputes are handled in D.C. Superior Court where there is a backlog of several hundred cases, and 75 per cent of the persons scheduled for trials never bother to show up and only one of every 100 cases goes to trial.

Under the new plan, an appearance before a hearing examiner could be arranged with a telephone call and there would be six examiners to hear cases. The decriminalization plan has the support of the judges of the D.C. Superior Court.

The installation of 1,200 parking meters is expected to raise an additional $420,000 a year. City officials said yesterday that there will be no increase in parking meter rates.

About 60 per cent of the parking law violators who are expected to be affected by the tighter operations live outside of the city, according to Transportation Director Schneider.

The city's work force will remain constant at about 43,000 employees, although the number of persons hired directly with city funds will increase by 45 persons to 36,190. The remaining persons will be paid through federal grants. The increase comes at a time when congressional committees are prodding the city to reduce its work force or forfeit increases in budget allotments.

The city is setting aside $37.2 million to provide 5.5 per cent cost of living increases for its regular employees during the 1979 fiscal year. Pay scales for city employees are keyed to federal salary schedules and if, as expected, federal pay rates are increased in 1979, salaries for city employees would probably increase also.

In the area of programs, the changes affecting the most persons are likely to come in the Department of Human Resources, the city's largest agency.The city will spend nearly $3 million to comply with court orders that require improvement of educational opportunities for city children who are mentally retarded or physically handicapped.

The increased programs will include establishing six mental health teams at a cost of $646,000 to screen and treat emotionally disturbed children. The city will also spend $500,000 to improve therapy programs at Forest Haven, the city's home for mentally retarded children.

The mayor's budget allocates an additional $9.6 million for welfare services, including a 5 per cent cost-of-living increase for persons in the General Public Assistance and Aid to Families with Dependent Children programs. The raises would go into effect April 1, 1979.

DHR is asking money to maintain a staff of about 150 persons to process of welfare applications. DHR is under court order to speed up its processing of welfare applications.

The agency also plans to spend $291,000 to increase its staff to install a new, tough child abuse law enacted this year by the City Council. There will be less physician services at city health clinics in 1979, however, because the city has had to reduce the amount of money used for such services in order to fund increases in other programs.

Another area of program changes that will affect many city residents is in the public library system, where there will be further reductions in the hours that libraries are open. This fall, the city is switching to a regional library system in which some libraries are closed during evenings and on weekends.

Next year the library department will have 34 fewer employees. As a result, there are likely to be fewer people working in each branch library although no additional reductions in library hours are expected.

The city's department of corrections will be making one of the largest staff reductions. It will reduce its work force by 104 persons, an overall reduction of 5 per cent, in order to absorb pay increases. As has been forecast for several years, the department plans to close the Women's Detention Center on North Capitol Street and to close one additional halfway house during 1979.

Corrections department officials believe they can maintain operations adequately as long as the city's prison population stays below 3,700. It is currently 3,604.

Since 1975, the city fire department had been using a system of rotating fire house closings because it lacked the money to keep all 53 fire companies in the city operating. Last year, after two children died in a Northeast Washington fire, the mayor "found" additional money to operate 51 of the companies on a regular basis.

The 1979 budget would allow those 51 companies to continue operating without a return to the rotation system. In addition, the city will return one of the remaining two companies, which had been performing as combination fire fighter-rescue squad units, to a full-time status as a rescue squad.

The police department budget anticipates a reduction of 102 policemen in the patrol division. That would bring the number of uniformed policemen down to 3,970. In the past, some congressmen have consistently overridden the city's efforts to reduce the number of uniformed police. CAPTION: Picture 1, The capital improvements program includes $15 million to renovate Eastern High School. By James M. Thresher - The Washington Post; Picture 2, and the Duke Ellington School for the performing Arts, by Margaret Thomas - The Washington Post