Montgomery County Executive Sidney Kramer, sounding an alarm over the pace of development, proposed a $1.26 billion budget for 1989 yesterday that he said would increase spending by 9.2 percent but still fall short of fully meeting the needs of a growing and changing county.

The recommended budget, $106.4 million more than this year's, calls for a 1 percent reduction in the property tax rate. But because of reassessments increasing property values by an average of 4.9 percent, the average homeowner would pay $53 more in taxes, or an increase of 3.5 percent.

Kramer's budget, in a departure from last year, recommends that the county schools receive $576.8 million or 99.1 percent of the amount requested. That represents an increase of 10.8 percent from last year, when the County Council cut $20 million from the school request, causing a bitter political rift with school officials.

The increased school spending would allow the county to pay 8 percent raises negotiated for teachers, and open six new elementary schools and a high school as the school system grapples with the projected arrival of 23,000 new students in the next six years in the biggest enrollment spurt in decades.

But Kramer and School Superintendent Harry Pitt differed yesterday on how much money would remain for improvements such as reducing class size and buying additional classroom materials. Kramer said $3 million remains for such purposes, but Pitt estimated the figure at half that.

Despite the record spending that is double the rate of inflation, Kramer and members of his administration presented the budget as a document of fiscal restraint for a county that saw a population increase of 16,500 last year and that expects more growth.

"Even with a 9.2 percent increase, this budget does not fully meet the many legitimate requests of our agencies, which had to be pared down to essentials," Kramer said. The budget contains few new programs but would increase user fees for such county programs as Ride-On Bus, which would raise rush-hour fares from 60 cents to 75 cents, and Montgomery College, which would increase tuition by $2 per credit hour to $40.

Kramer's recommendation to lower the tax rate from $3.01 to $2.97 per $100 of assessed valuation is in contrast to last year when the Democratic county executive, in his first year in office, engineered the first increase in residential property tax rate in seven years. Rates were increased by 7.4 cents per $100.

The reduction, Kramer said, fulfills his promise to return to residents the extra revenue the county is receiving through the so-called state income tax windfall brought about by federal income tax law changes in 1986. Without the return of that revenue, estimated at $7.2 million for 1989, the average tax bill would have increased by $73.

Kramer -- in a pointed message to County Council members who must adopt a budget by May 15 -- cautioned against increasing the budget any further. He said the budget must be viewed with an eye to the future and uncertainties about the national economy.

"We do not want to create a need for a substantial tax rate increase next year, which would be especially burdensome if the economy were to weaken," Kramer said.

Such concerns about a slowdown in the economy that could affect the revenue that fuels government are beginning to surface throughout the Washington area as local jurisdictions prepare spending plans for next year.

In the District, Mayor Marion Barry released a $2.8 billion budget last month that calls for new taxes to provide new services in the face of shrinking revenue. Arlington County has proposed a "standstill" budget that assumes no increase in the real estate or personal property tax rates. Fairfax County is set to release its budget today as its officials wrestle with the demands of explosive growth.

The stresses that growth places on a community's fiscal capacity were prominent in Kramer's budget message to the council. "The growth in our community that is a manifestation of our good health is likewise the source of tremendous expenditure pressures," Kramer said, repeating a theme from his announcement last week opposing a plan that could speed the pace of development in the county.

The county, he said, needs space for more pupils and "we will need more police officers, firefighters, corrections staff, health services, road maintenance, library books and trash collection."

Montgomery, Kramer said, can afford a moderate amount of growth but "we must take care . . . not to let growth occur too rapidly, and we must also be certain that county budgets do not get too overextended."

An example of this fiscal conservatism, aides said, is Kramer's recommendation to use $20 million in one-time revenue from capital gains liquidation, resulting from federal income tax changes, to pay for planned capital improvements. That, they said, reduces future debt service costs and it frees additional revenue in future years. Kramer said he resisted using that unexpected windfall for new programs that would require ongoing financing.

Among other proposed improvements, Kramer said he is recommending an increase of $4.7 million, or 7.2 percent, for the police. That includes financing for a "major crime" unit to deal with the increases in drug and sex offenses. He said he also is recommending funds for 10 new positions to provide previously announced scooter and foot patrols for the Silver Spring and Bethesda business districts.

The fire department would receive a 12 percent increase to add 15 firefighters and a coordinator to encourage volunteer service. The county's 911 emergency system also would receive 12 additional positions.

Kramer also is recommending an increase of 12 percent for the corrections department, which would pay for five additional corrections officers and 14 other support positions to deal with a steadily increasing inmate population.

The budget provides $250,000 for a reorganization of the health department that Kramer said will strengthen the county's ability to deal with AIDS and other communicable diseases.