Maryland Gov. Harry Hughes exempted payroll and escrow accounts today from the $1,000 per month withdrawal limit that he imposed a week ago on accounts in state-chartered savings and loan associations. The governor also lifted the limit entirely from 16 thrifts, all in the Baltimore area.

The action was the clearest signal yet to apprehensive depositors of the easing of a crisis touched off May 9 by revelations of management problems and possible criminal misconduct at the Old Court Savings and Loan Association in Baltimore.

"It's an indication . . . we're out of the crisis," Hughes said tonight.

Hughes' amended executive order removes some of the most burdensome hardships suffered by the 1 million holders of accounts in the 102 S&Ls that until last weekend were privately insured.

Since Hughes imposed the $1,000 withdrawal limit on May 14, state officials and legislators had been inundated by complaints from depositors who said it prevented them from paying bills, closing on real estate transactions and paying employes' salaries.

The revised executive order, which Hughes signed at 6:17 p.m. today, exempted four types of accounts from the $1,000 withdrawal limit: general escrow accounts, such as commonly used by lawyers; payroll accounts; real estate escrow accounts, including those used by prospective home buyers to set aside down payments for new homes, and accounts held by those businesses in which an S&L has any holding.

It also exempts persons over 65 who need funds for medical care and all persons who need funds for emergency medical care. Tuition payments will be exempted if they fall due while the executive order is in effect and alternative funding cannot be found.

Anyone withdrawing funds under any of the exemptions will be required to sign a statement, under penalty of perjury, that the funds will be used exclusively for the stated exemption.

Depositors still limited to $1,000-a-month withdrawals may, under the executive order, accrue their withdrawals. For instance, someone who takes out $300 today could withdraw up to $1,700 a month later.

An earlier draft of the executive order was sharply criticized by several members of the House of Delegates and state Senate, saying the fourth category gave an unfair advantage to some S&L officers. The practice of some S&Ls of setting up their own real estate ventures has been widely cited as a primary cause of the ongoing crisis.

The crisis, which entered its 13th day today, was touched off by revelations of management changes and possible criminal misconduct by top officers of the Old Court Savings and Loan Association of Baltimore.

That thrift, along with Merritt Commercial Savings and Loan of Baltimore, were placed under conservatorship as anxious depositors withdrew millions from associations across the state. Hughes' revised order does not apply to Old Court or Merritt.

"You're still going to have hardship -- we know that," Hughes said. "But we can't open it up too wide. I'm sorry, but that just has to be the case. We'll work out of it."

Today's action by Hughes came three days after he signed into law seven bills passed by a special session of the General Assembly that he called last Friday. They give the governor broad emergency powers over the thrift industry, and force all 102 of the privately insured thrifts to be insured either by the Federal Savings and Loan Insurance Corp. or a new state insurance agency. The affected thrifts had previously been insured by a private corporation called the Maryland Savings-Share Insurance Corp.

The original version of the amended order sent down by Hughes today required most depositors who withdraw funds to take it either in cash or in a check issued by the thrift, and would have barred depositors from writing checks on NOW (interest-bearing checking) accounts.

"You're going to have more lines than you had before," warned Sen. Arthur Dorman (D-Prince George's). Senate Minority Leader John A. Cade (R-Anne Arundel) said the restriction creates "an incentive for every NOW account holder to draw out $1,000 every 30 days."

The NOW account restriction was dropped from the final version.

Other lawmakers protested that the exemption that allows businesses in which a thrift has an interest to withdraw money freely, favors well-connected depositors.

"The insider gets a break, the independent does not," Sen. Laurence Levitan (D-Montgomery) said.

The governor's announcement coincided with a largely behind-the-scenes struggle over proposed legislation that would increase the prosecutorial power of Attorney General Stephen H. Sachs in his criminal investigation of Old Court's dealings.

Several legislators said they were reluctant to grant new powers to Sachs to conduct a high profile investigation, lest it boost Sachs' bid for governor in 1986 at a time when legislators are beginning to align themselves with him or one of the other two likely candidates -- House Speaker Benjamin Cardin and Baltimore Mayor William D. Schaefer.

The legislature will hold hearings Thursday on several bills that would give Sachs new powers, including one sponsored by the Hughes administration that would give the attorney general the authority to grant witnesses immunity from prosecution in exchange for their testimony on S&Ls before grand juries. The full General Assembly will consider that issue next Tuesday.

When Senate President Melvin A. Steinberg told the Senate that Sachs was seeking the immunity power, the message was greeted with scattered hisses.

Amid some suggestions that Senate Judicial Proceedings Committee Chairman Thomas V. Mike Miller (D-Prince George's) -- a Schaefer partisan -- would do his best to kill the legislation, a Baltimore state senator asked Steinberg to instruct Miller's committee in advance to report out the bill.

"This body is not going to be swayed by political rhetoric," responded a visibly angry Steinberg. "We should not be bamboozled into passing a bill without reviewing its need, its purpose and its impact."

The political ramifications also were discussed at an early morning meeting of the Senate leadership, and how the legislature could delay action on the immunity proposal without creating the appearance of smothering the investigation.

Steinberg, said one participant, expressed his resentment at the "end run" around the legislature by Sachs and Hughes in drafting the immunity legislation.

"It's unfortunate we are so near an election where a number of the principals who are involved with the legislation may run for office," said Dorman. "It's important to deal with it on its merits. We're dealing with a savings and loan that has wreaked havoc on the state of Maryland. It's important to go over and above the political ramifications."

"There are a lot of politics involved," Levitan agreed. "The question is, if in fact the legislature doesn't approve broad powers, will the attorney general then point a finger at the legislature. He could have the best of both worlds. If he gets the powers, that basically puts him in the spotlight for many months to come. If he doesn't, he could then say the legislature failed to investigate corruption in the savings and loan industry."

Miller insisted there would be "no politics" in how he handled the legislation and predicted the bill would be killed in the House Judiciary Committee.

Despite reservations about the political implications, there is a growing public outcry for the state to prosecute those responsible for the crisis, which includes allegations of millions of dollars in insider loans to officers of Old Court.

"The people are now into phase two," said Sen. Barbara Hoffman (D-Baltimore), a member of the Judicial Proceedings Committee. "They are furious and they want someone to hang. If we can't offer immunity from prosecution for white-collar crime, it's harder to get to the bottom of it."

"If we walk out of here without doing an investigation, that makes us look as bad as everyone else," added Del. Paula Hollinger (D-Baltimore County), whose district includes the office of Old Court.