Massachusetts Gov. Michael S. Dukakis (D) was in town yesterday to do his bit to offset President Reagan's budget proposal and State of the Union message with his state's version of a program dear to Reagan's heart -- getting people off the welfare roll and on the payroll.

It's called "E.T. Choices," and the "E.T." doesn't stand for extraterrestial. It's for employment and training, and over the past two years more than 23,000 welfare recipients in Massachusetts, mostly unwed mothers with limited education and skills, have been placed in full-time or part-time private-sector jobs at an average wage of more than $10,000 annually.

To help dramatize the program, Dukakis was accompanied by three former welfare mothers. The E.T. program is one the Democrats are touting among those created and administered by Democrats nationwide that, in the words of national party Chairman Paul G. Kirk Jr., will be "steppingstones to a Democratic administration in 1989." One of Kirk's priorities is to demonstrate that while the Republicans hold the White House, the Democratic Party is alive and well and solving problems around the country at the local level.

Dukakis said the program had reduced the number of Massachusetts families on welfare by nearly 10 percent last year and saved the taxpayers nearly $70 million over the past two years. He scoffed at Reagan's proposal to eliminate from his budget federal funds that help make the program possible. Ins:

Flip-flop is a two-way street: The Democrats also got some good news yesterday from Minnesota, where David Johnson announced his candidacy for the House seat of Rep. Vin Weber (R). Johnson, a farmer and Reagan-Bush delegate to the 1984 Republican national convention, switched parties and decided to challenge Weber on the grounds that Reagan's agricultural policies have been disastrous for the nation's farmers.

California state Sen. Milton Marks recently switched from the GOP to the Democrats. And the Republicans have welcomed several well-known Democrats, including former representative Kent R. Hance of Texas, Tampa Mayor Bob Martinez and Wayne Lucas of Michigan, all of whom are running for governor in their home states.

A two-way challenge? New York Democrats, who have been looking for a challenger to Sen. Alfonse M. D'Amato (R), may have two. Franklin Havlicek, a lawyer and labor-relations director at NBC, announced his candidacy yesterday but said that he would continue to run only if he gets the backing of state party leaders, who formed a committee last week to screen candidates.

Mark Green, a public interest lawyer and Ralph Nader protege, says he will announce his candidacy in March. Green says he has raised $100,000 and plans to raise and spend $3 million. D'Amato has the largest war chest of any senator, about $5 million, and he plans to spend more than $8 million. Green, however, says he has a big intangible asset: "I'm on the line right below [Gov. M. Mario] Cuomo on the ballot." Outs:

Now a two-way race: Millionaire businessman Jules Patt of Altoona, saying that he lacked the "fire in the belly," dropped out of the Pennsylvania Democratic gubernatorial race after spending $700,000 of his own money. It leaves the field to former state auditor general Robert P. Casey and Edward G. Rendell, a former Philadelphia district atttorney.

Patt's withdrawal is a blow to Rendell, whose strength is in the Philadelphia area and who hoped Patt would pull some of Casey's vote in the western party of the state. Casey was recently endorsed by Pittsburgh Mayor Richard S. Caliguiri, former Pittsburgh mayor Pete Flaherty and former governor Milton Shapp. Flaherty had considered challenging Sen. Arlen Specter (R) but decided against it.