The financial crisis that has forced the District of Columbia government to lay off workers and cut services is also taking its toll on and beneath the city's bumpy streets.

Cutting corners on maintenance to save money, the District is setting the stage for above-ground and subterranean nightmares by allowing water pipes, sewer lines, roads and bridges to deteriorate faster than they can be repaired, according to a new study. Century-old pipes and bridges eroded by salt have been neglected instead of repaired and the cost of catching up is rising far faster than the available resources.

Some of the city's 1,436 miles of cast-iron water pipe is 160 years old; a third of the 27,500 valves in the water distribution system have outlived their life expectancy of 75 years and some date back to 1852; nearly a third of the fire hydrants were installed in the last century and should be replaced, according to the report by the Federal City Council, a private organization of city business leaders, lawyers and political leaders.

Old and neglected as it is, the District's network of roads, bridges and pipes is still in better condition than those in some other old cities, but it will not be in another decade unless action is taken now, the report said. But the council concluded that "to overcome the existing backlog of deferred repairs and to sustain a regular program of preventive maintenance more than $100 million a year in 1980 dollars is needed during each of the next 10 years."

The report, called "Local Public Infrastructure in the District of Columbia," is intended as a warning to the District that it must recognize that shaving small amounts from maintenance and replacement budgets today guarantees more costly problems tomorrow.

City officials cooperated with the council in preparation of the study and do not dispute its conclusions. There is "no question" about the deterioration of the water and sewer pipes, said Larry Bailey, deputy administrator of the water resources management division of the Department of Environmental Services. Mayor Marion Barry was warned by his team of transition advisers before he took office that half the catch basins in the city's storm sewer system were clogged with debris. Department of Transportation officials had acknowledged earlier that bridge and road maintenance have lagged as funds dried up and the cost of materials rose.

Bailey said the water system is "definitely having problems" because of layoffs of technicians in his department.

The expenditure of $100 million a year in new funds on maintenance of the city's infrastructure would place a staggering burden on a District government scrambling to save dollars and on a community that is already the most highly taxed in the region. The authors of the report acknowledged the financial problems but said that the cost of postponing work that must be done would only be greater in the future.

They recommended that the city consider increasing its water and sewer user fees, seek more federal funds to pay for the upkeep of facilities built to meet federal standards and consider asking the suburban jurisdictions that use the Blue Plains sewage treatment plant to pay a higher share of its costs.

The report makes clear that the practice of cutting back on necessary maintenance and replacements to save money did not begin with the Barry administration.Neglect of the streets is traced back to 1964, nearly 150 miles of streets that should have been resurfaced since then have gone unpaved. More than 50 of the city's bridges need work but only four are undergoing major repairs at this time and three more are scheduled for redecking.

Calculating that the city's water and sewer lines and their valves and filters have a book or replacement value of nearly $6 billion, the report notes that the amount of money spent on maintaining them annually is less than 1 percent of that figure -- a finding that reportedly astounded utility corporation executives on the council committee that prepared the report. Private utilities routinely spend 6 to 10 percent of their facilities' book value on annual maintenance.

The 20 council members who signed the report said it was "not intended to be a definitive technical analysis or a comprehensive prescription; rather we hope that it will serve a warning, a statement of encouragement and an offer to help."