President Reagan today will propose that the federal government spend $974 billion in fiscal 1986. Directly or indirectly, a few thousand of those dollars will find their way to the neat, green-shuttered ranch house on Lansdowne Street here where the Hovis family lives.

It's not that Dennis and Cathy Hovis and their sons are going to get cash from the government -- although Dennis' 68-year-old mother, Olive, receives a monthly check from Social Security, the largest single item in Reagan's budget.

Rather, the Hovis family, like every other household in the United States, will benefit from the budget through hundreds of federal services financed by hundreds of individual line items set forth in the proposal the president will send Congress today.

Dennis Hovis, in turn, will pay for those services through various federal taxes -- income, excise, employment, Social Security and others -- levied on him and his business, the Georgia Ann Style Shop, a busy clothing store on Main Street in this small midwestern town.

As with most Americans, Dennis Hovis finds that his most direct connection with the federal government comes when he pays taxes. It is not an experience that makes him fond of Washington.

"The forms! The forms!" said Hovis, 36, a friendly, thoughtful man with brown hair and tortoise-shell glasses, leafing through tax papers in the cluttered office at the rear of his store. "You've got your 1040s and your 940s and your 942s and all that. You've got FICA. You've got FUTA. You've got to get this one in by the 15th, and that one by the 31st. It's a pain . . . . Royally."

De Soto, home of a big Missouri-Pacific Railroad maintenance and repair yard, is a town of 6,200 on a steep hillside about 40 miles south of St. Louis. It is in many ways the archetype of the American small town, except for one distinction.

According to the Census Bureau, De Soto was the "Center of Population" of the United States when the 1980 census was taken. That is, if the nation were a flat tray and each of the 230 million Americans stood on it at the point of his principal residence, the tray's balance point would fall exactly at De Soto.

Set off by itself amid rolling farmland, this quiet town seems a world away from the bustle and bigness of the Federal Triangle. But spending a little time with the Hovis family makes it clear that the federal government is deeply woven into the fabric of daily life.

Reagan's budget proposal roughly breaks down into three big categories. Just over one-third goes to direct grant programs, such as Social Security and food stamps. Just under one-third goes to defense. The other third pays for all other government programs, hundreds of which find their way to the Hovises' home and Dennis Hovis' business.

The shelves in the family's kitchen -- as in every other kitchen in America -- are replete with evidence of the federal government.

The Hovises' kitchen is full of foodstuffs that have been checked for wholesomeness by federal egg, meat, produce and dairy inspectors. The soda pop in the refrigerator contains food coloring and sweeteners tested and certified by the Food and Drug Administration. Prototypes of the toaster and other appliances have been examined by engineers at the Consumer Product Safety Commission. The nutrition statements on the cereal boxes have been approved by the Federal Trade Commission. The heating coils in the oven have been tested for efficiency by the Department of Energy. Even the paint on the walls has been approved by the Environmental Protection Agency.

The federal government's role in the kitchen does not always redound to the Hovis family's favor. When Kathy Hovis shops at Kroger's or Save-A-Lot stores here, she pays an artificially inflated price for milk and other agricultural commodities because of federal price-support programs that shore up farm prices.

On the other hand, many line items in the federal budget save the Hovises money, in large amounts and small.

Among the line items in Reagan's proposal for the Education Department is one that helps pay for lunches at public schools. Betty Adams, bookkeeper at the De Soto School Board, says the town receives about $23,000 a month from the federal government to subsidize school lunches.

As a result, Kevin and David Hovis each pay only 85 cents a day for their hot lunch at Vineland Elementary School. Without federal funds, Adams estimates, the boys would be charged 25 to 30 cents more.

The Hovis family does not have a home computer, but the boys have access to a roomful of personal computers at their school -- purchased with a $20,000 "Chapter 2" grant from the Department of Education.

Economists say the federal budget can be viewed as a huge income-redistribution machine -- that is, every line item in the budget can be looked at as a source of income for somebody.

Dennis Hovis received this income in a direct form years ago. His father died when Dennis was still in high school, making him eligible for Social Security survivor's benefits -- monthly checks that provided "a tremendous help at a time we really needed it," Dennis' mother recalls.

Today, as a successful businessman, Hovis gets no direct payments from the government, but he benefits from the monthly flood of federal checks.

"As a retailer, your sales are always better the first week of the month," he said. "Those Social Security checks, Railroad Retirement checks and like that come in, and my customers receive them. And I can see the impact in my store."

State, county and local governments are other major beneficiaries of the federal budget. As a member of the De Soto City Council since 1981, Dennis Hovis has seen this firsthand.

According to Lawrence C. Palmer, De Soto's city manager, the town receives about $120,000 annually in federal revenue-sharing money. Although this represents a relatively small share of the city's $2.3 million annual budget, the council has become dependent on the check from Washington to buy such essential equipment as trucks and road-repair gear. "Every city in the United States would be in a disaster situation without that revenue-sharing income," Hovis said.

Now and again De Soto receives other goodies from the federal government, such as the $2.25 million that paid for 90 percent of the town's new water treatment plant.

"Of course, it's only fair that the federal government should pay because it was the federal government that made us build a new plant in the first place," said Palmer, the city manager.

De Soto also benefited from federal largess when it floated an industrial revenue bond to build a new plant for the Hamilton Shoe Co., one of the town's major employers. Because Washington has agreed not to tax the interest income from such bonds, the city was able to sell the bonds at a below market rate of interest.

In addition, Hovis and other Main Street business owners are hoping that Reagan's fiscal 1986 budget includes the $450,000 Community Action grant they are seeking to broaden the street and provide more parking for downtown shoppers. "Today, with that Missouri-Pacific rail line running right next to Main Street, we really don't have a good parking situation. That's why we need the grant," Hovis said.

Not everything about federal spending is good for business, however. Dennis Hovis moonlights as a life insurance salesman, and in this he finds himself in direct competition with Washington. Because of the hundreds of billions paid out through Social Security and other federal grant programs, people buy less private insurance than they would otherwise.

And of course, Hovis and other working people across the country must pay the $800 billion in taxes the Reagan budget calls for in fiscal 1986.

Hovis pays corporate and personal income taxes and various other levies. For some taxes, he sends in a quarterly check; for others, he makes a monthly deposit to a government account at the local bank.

Like other American workers, Hovis runs into the federal budget every time he gets a paycheck.

Although he is self-employed, he receives a quarterly check from the city for his services as a City Council member. The pay is $100 a year, but the quarterly check comes to $23.45.

"And I look at it and I think, well, that other $1.55, I hope they're making good use of it in Washington."