ANNAPOLIS, JAN. 20 -- Maryland Gov. William Donald Schaefer, boosted by a thriving state economy and a robust treasury, today offered the General Assembly a $9.8 billion budget proposal that emphasizes social concerns and bricks-and-mortar ambitions.

Under Schaefer's plan, the state's budget for the fiscal year beginning July 1 would increase by $812 million -- and Schaefer only reluctantly stopped there.

The state has more needs, he said, but the self-imposed budget limits dear to the legislature kept Schaefer from spending any more money. Even so, Schaefer and lawmakers disagree over whether he is within the spending guidelines.

In his budget message, Schaefer said the "promising growth" of state revenue allowed for significant spending increases without higher taxes.

The 8.5 percent increase in spending, at a time when inflation is only about 4 percent, will allow for a number of new social services initiatives: increases in day care, mental health programs, welfare payments and help for juveniles in trouble.

One of the governor's highest budget priorities is education, with additional funds targeted for local schools as well as colleges and universities.

Schaefer has used the state's unexpectedly high revenue to finance an ambitious construction program that contains new projects, such as a light rail transit system connecting northern Anne Arundel County and Baltimore, as well as repair and maintenance of what Schaefer says are crumbling state facilities.

Montgomery and Prince George's County officials are searching the document for examples of how they fared, but their preliminary judgment was that at least their top priorities had been met.

Montgomery County received approval for the construction of a University of Maryland classroom building at Shady Grove and a new MedEvac helicopter base.

Prince George's County again would receive state money for its successful magnet school program and Greenbelt most likely would be the site for a proposed residential high school for bright math and science students.

In his budget message, the governor wrote that cooperation between the public and private sectors and an array of new programs will "make Maryland the envy of the nation."

But he acknowledged that not all of his proposals, outlined in his State of the State address last week, will fly easily.

"The response may have lacked total adoration, but it is obvious we are pursuing the same goals," Schaefer wrote.

"I know there will be some bumps and rut on the road to sine die {the end of the 90-day session} but we have the skills it takes to enact a solid plan of genuine growth for another 12 months."

Legislators gave Schaefer high marks for his priorities, but criticized his style.

"It's balanced, as you would expect, showing his interest in people-oriented programs . . . and his interest in bricks and mortar," said House Appropriations Committee Chairman Charles J. (Buzz) Ryan (D-Prince George's).

But Ryan and other legislators said their analysts believe Schaefer came in nearly $30 million above the spending limit, despite the governor's claim that he was on target.

"The governor has broken faith with the legislature in making a very strong statement he's going to abide by spending {limit} and then putting out a budget that in no way conforms to the spirit of the law," said House Republican leader Ellen R. Sauerbrey of Baltimore County.

Legislators also were concerned that Schaefer is putting too much money into reserve funds whose purposes are not fully explained.

Schaefer already has made clear that he wants $20 million for a fund that could be used to lure businesses to Maryland and keep those already in the state.

But legislators were surprised to see an additional $10 million fund in the budget, one that Schaefer aides said would be used for emergency disbursements. "Slush fund junior" is how Sauerbrey described it, and legislative leaders said they will make sure legislative approval is needed before the money can be spent.

Legislators have the right to cut money from the governor's budget, but they have limited power to use the money for other purposes. Except in rare instances, they cannot transfer money in the budget from one program to another.

The battle over executive versus legislative powers is a continuing one, and Schaefer is concerned about how little flexibility there is in the budget.

Budget Secretary Charles L. Benton said more than 55 percent of the budget is dictated by laws and formulas -- 93 percent of the $1.6 billion spent on education is disbursed in that fashion.

Benton pointed out that in the nearly $10 billion spending measure, Schaefer could spend a little more than $50 million on new programs that are designed to continue each year.

Because of those limits, social services advocates said they were happy that education and social programs such as mental health and day care received as much attention as they did.

Lynda E. Meade of Associated Catholic Charities said that advocates did not receive as much as they asked for, but she was encouraged that Schaefer changed his mind about a 4 percent increase in Aid to Families with Dependent Children and raised it to 5 percent.

"That was a step forward," she said.

The governor proposed $8 million in cleanup programs and education initiatives directed at the Chesapeake Bay, but environmentalists were withholding judgment until they saw details.

They had wanted at least $20 million in additional funds, and representatives of several conservation groups said it was unclear whether the recommendation would be enough to start on the bay cleanup agreement signed by Maryland and other states bordering the bay.

Schaefer also wants the state to embark on an ambitious, nearly $350 million capital program that would include $3 million for repairs on state buildings and $2.5 million for asbestos abatements.

He also proposed a long list of projects in every corner of the state, including $10 million for the first phase of the proposed math and science high school, $15 million for a District Court building in Salisbury, a number of projects at universities and colleges and a $3 million expansion of the National Aquarium in Baltimore.

Priorities in the budget include:

Welfare: The budget would provide a 5 percent increase in Aid to Families with Dependent Children, raising the monthly grant for a family of three by $17, from $359 to $376.

However, the administration is projecting a $3 million drop in its costs -- down to $110 million in the coming year -- because it projects a decrease in the number of people receiving payments.

Currently, 177,000 are in the AFDC program, two-thirds of them children, roughly 6,000 fewer than last year. Schaefer, who has been pushing to get welfare recipients into jobs and off the rolls, is projecting a further drop in the AFDC population in fiscal 1989, down to 168,000.

Day care: Concerned that poor women are forced to remain on welfare because they cannot find day care for their children, Schaefer is proposing spending $5.5 million in loans and loan guarantees for construction and renovation of private day care centers around the state.

He also is budgeting $150,000 to encourage private companies to provide day care for their employees, and at least $300,000 for a pilot day care program for state employees.

AIDS: Schaefer plans to spend nearly $10 million in state and federal funds on AIDS education, testing, counseling and distribution of the experimental drug AZT.

The administration is supporting measures to require testing of sperm donors and to require laboratories to submit monthly reports of the number of people who have tested positive for the disease to the state health department.

Adoption/family planning: The budget includes $250,000 to aid an adoption program in churches. That sum is the first component in what the administration is billing as a larger, soon-to-be-unveiled program to speed adoptions, prevent teen-age pregnancies and aid teens with children.

Schaefer already has said that he will not increase Medicaid funding for abortions for poor women as he promised to do while a gubernatorial candidate.

Mental health: Schaefer proposed an $8 million increase as part of a three-year initiative to reduce crowding in mental hospitals by providing more community-based services for mental patients.

To pave the way for deinstitutionalization, the administration plans to hire more staff for outpatient services, including the supervision of apartments for the chronically mentally ill. The administration wants to move aged mental patients out of mental hospitals and into private nursing homes.

Prisons: Schaefer plans to spend $38.5 million as the first installment of an 11-year, $368 million program to demolish antiquated prisons, including the state penitentiary in Baltimore, and build new facilities in their place, eventually including a minimum-security prerelease center in Prince George's County.

Light rail: The administration proposes spending $43 million in the coming year on an express rail system for the Baltimore area. The final price tag for the system, which would be completed in 1991, would be $290 million.

The plan has drawn significant opposition from lawmakers who are concerned that the project would siphon transportation funds away from roads and bridges in their districts. They also worry that a tax increase could be required down the road to complete the line.

State employees: Schaefer is seeking funds to add 1,800 state employees to a work force that now totals more than 71,000. He is also asking for 4 percent pay raises for most employees, an amount that may seem paltry next to the increases he is seeking for some members of his Cabinet.

The governor wants to give six of the top officials in his administration $25,000 pay raises, bringing their salaries to about $97,000.