Maryland Gov. Harry R. Hughes asked the General Assembly today to eliminate unnecessary government agencies, reduce the state income tax, and extend property tax relief to most homeowners and renters'

The proposals were made in Hughes' State of the State message and accompanying $4.6 billion budget for 1980, a budget calling for the smallest overall increase in 17 years.

"Debilitated by inflation, embarrassed by corruption, angered by waste in the public sector, Maryland's citizens expect answers and action from us," said Hughes, who nevertheless conceded that his first budget was primarily the work of his predecessor, former Acting Gov. Blair Lee III.

The proposed budget tilts slightly towards the social services, fulfilling Hughes' campaign pledge to increase aid to education -- state aid would rise from $690 to $780 per pupil -- boost welfare payments and liberalize eligibility standards for Medicaid recipients.

Hughes legislative agenda and budget contained few if any surprises and were modest by past standards. Even the tax reform proposals -- increasing the standard income tax deduction from $500 to $1,500, extending the tax credit program to renters and eliminating the manufacturing and farm equipment tax -- were concepts that originated in the legislature or in previous administrations.

Members of the 1979 General Assembly, who gathered in the House chambers at 2 p.m. this afternoon for Hughes' address, received him politely and generally embraced his message as a reaffirmation of their own priorities. "Most of the proposals he talked about were conceived in the legislature," said Senate Majority Leader Rosalie Abrams (D-Baltimore). "There was little new in it, but it was the right approach."

Indeed, the modesty of the Hughes proposals -- spending would go up 7.7 percent in 1980, compared to 11 percent this year -- was such that even the legislature's leading conservatives found little to quarrel with. "They're stealing the thunder from us," said Sen. Edward J. Mason (R-Cumberland), the minority leader in the Senate. "It was a traditional Republican speech and, frankly, I thought it was very good."

Other senators, proponents of the Senate's long-standing patronage system, were pleased that Hughes, in his speech, did not entirely foreclose their influence on appointments. "Never confuse opening new doors with closing you out," Hughes told them. "For, if we are to serve our state well, you must be my closest allies, my partners in progress."

In his address to the legislature, Hughes emphasized that his program was drafted in the spirit of austerity imposed by tax-weary residents. If lawmakers respond with "honest and efficient government," he said, "there will be no reason for recoruse to Proposition 13-type plebiscites in Maryland."

Later in his speech, Hughes urged the legislature to "make these hard decisions" to phase out unnecessary and wasteful government programs, saying Marylands "want streamlined government. As we've seen across America, if we don't do it for them, they are ready willing and able to do it for themselves."

The 1,134 new state jobs proposed by budget officials working for Lee, he said, "deeply disturbed" him because of the 5,000 vacancies in state government for which state money has been allocated. Instead of funding new positions, he said, it would seem logical to shift the funding for unfilled jobs.

One of the few spending increases he endorsed was a 6 percent boost in salaries for state employes and a 10.8 percent raise for state police officers. "We cannot expect our public employes to serve the state at personal financial sacrifice," Hughes said. "That's not part of the job description."

The $78 million tax relief package that is the cornerstone of Hughes' legislative agenda would be funded by a $218 million budgetary surplus that is expected to accumulate in the state treasury by the start of the next fiscal year, July 1.

The surplus -- which resulted from the unanticipated success of the staterun lottery and unexpectedly high income from sales and business taxes -- would also be used by Hughes to fund the $36 million rise in aid to education caused by increasing the amount the state would spend for each student.

Another $50 million of the surplus would be used to finance new construction programs, while $50 million more would be sent back to local subdivisions as reimbursement for back taxes they never claimed from the state and compensate them for the loss of revenue that would result if the property tax relief program is enacted.

The tax relief package breaks down into separate proposals for income and property taxes. The income tax proposal would liberalize the standard deduction for state income taxpayers, returning $34 million to them in the first year.

Specifically, an individual who is now allowed a maximum deduction of $500 would be able to triple that allowance for a real savings of $75. Couples would be able to deduct $3,000, double the current maximum for a real savings of $150.

For property tax relief, Hughes simply recommended an extension of the Homeowners Tax Credit Program passed by last year's legislature.

That law provided up to $450 in credits for homeowners over 60 who earned no more than $30,000 a year and paid no more than $1,980 in taxes. Homeowners younger than 60 with the same income and tax liabilities could receive a maximum credit of $225.

The program advanced by Hughes would provide the maximum $450 credit to younger homeowners. There will also be some relief for renters who pay more than a certain percentage of their income for rent, Hughes said, although the details have yet to be worked out.

The property tax proposals would amount to $16 million in relief, if passed, adding to the $51.8 million appropriated for the program last year. But experience has shown that the credits are not always claimed because of complicated application procedures.

A form of tax relief for businesses fills out Hughes' tax program -- a proposal to eliminate the 2 percent sales tax on manufacturing and farm equipment. The $11 million returned to the businesses, he said, should be considered a gain for economic development.

Along with the operating budget, Hughes submitted a $139 million capital budget to pay for 183 state construction projects and purchases Highlights of this capital budget proposal include:

$10 million for the construction of local elementary and secondary schools.

$15.4 million for the construction of a Department of Agriculture building on the outskirts of Annapolis. Hughes, at a budget briefing Thursday, said he was uncertain about the need for this project and may drop it later.

$6.5 million for the construction of a 500-bed medium security prison annex in Jessup. This project represents one of the state's first responses to a court order to ease the overcrowding in its prisons.

$1.7 million for improvements to state parks and shore erosion control projects.

$3.5 million for the purchase of International Towers, a building near Baltimore-Washington International Airport which has been leased since 1972 by the department of education. Among the owners of International Towers are W. Dale Hess, Harry W. Rodgers III and his brother, William A. Rodgers, all of whom were codefendants in the Marvin Mandel corruption trial. Hughes, who had no part in the recommendation to buy the building and adjoining 10 acres, said he is "very sensitive" to questions about the ownership and has not decided whether he will follow through on the purchase.

Expenditures under the $4.6 billion operating budget are distributed in approximately the same proportion as in past years, with three of every 10 cents going to public education, two of every 10 cents going to transportation and 1.5 of every 10 cents going to health programs.

Aid to education would increase by $52.5 million, including an extra $9.8 million for new school construction, $6.2 million for programs for handicapped children and $3.5 million for intensive schooling for children with learing disabilities.

Hughes, who pledged during the campaign to attract new industry to Maryland, has also proposed spending an extra $3.7 million to increase advertising for business and industrial development, and expand efforts to attract foreign companies by setting up a state-run recruitment office in Tokyo.

Welfare payments would increase 6 percent, netting an additional $192 a year for a family of four. At the same time, the eligibility requirements for Medicaid recipients would become more liberal, making it possible for a person earning $2,500 a year to apply for the medical benefits. The present eligibility cutoff is a maximum salary of $2,300.

In the field of higher education, the Hughes budget proposes a $35 million increase for the state's community college and state college system. The budget for community colleges would drop $1.7 million because enrollments have been leveling off, while the University of Maryland would receive an extra $40.7 million if the budget was approved.

The state's highway fund, which is normally increased on an annual basis, would be cut $2.5 million next year because highway officials have been slow in starting and completing roads projects authorized in past years.