The District government's financial condition has deteriorated so badly that major tax increases and reductions in the work force are inevitable after the November elections, according to top Barry administration officials and several key members of the D.C. Council.

For years, many D.C. agencies overspent their budgets, but the government was able to overcome the problem with the help of unexpected surges in tax revenue and creative-but-legal accounting techniques that allowed the city to understate the size of its deficit.

But with tax revenue declining sharply because of an economic slowdown, the city can no longer paper over its problems. The District is running out of money and may be unable to meet its payroll and pay its bills without an infusion of tax revenue.

"Once the elections are over, {the council} is going to have to raise taxes and cut programs," said city Budget Director Richard C. Siegel. "They're going to have to do it right away. They're not going to have the luxury of waiting two years, like George Bush."

At the end of September, the city's cash balance -- essentially, the money in its bank account -- is projected to fall to $25 million, the lowest it has been since the District's financial crises of the early 1980s and a pittance compared with the $3.1 billion annual budget.

Without an infusion of tax revenue or reduction in the city's $150 million monthly payroll, the city probably will be unable to meet its financial obligations at some point in the next fiscal year, according to ranking administration officials.

In March, the D.C. Council rejected Mayor Marion Barry's proposals for new taxes on income, professional services and public utilities, but several council members now openly concede they will have to revisit these and other taxes once the campaign is over in November.

With members either facing reelection or seeking higher office, the council last week refused to act on Barry's proposals for immediate major spending cuts and a boost in business taxes. It chose instead to let the mayor act unilaterally in reducing spending and imposing a four-day furlough of 26,000 employees.

A tax increase is inevitable, many council members say, because there is no money in the 1991 budget approved by the council to pay for a promised round of pay increases for teachers and other city workers. The problem will become even worse if the economy continues to falter and agencies such as the Corrections and Human Services departments continue to substantially exceed their budgets.

"Are we going to have to raise more revenue?" asked council member William Lightfoot (I-At Large). "Yes, we probably are."

Council member John A. Wilson (D-Ward 2), chairman of the Finance and Revenue Committee, said it would be "ludicrous" to expect the government to balance the budget next year without raising taxes. "Even if we cut spending, we've got a problem," Wilson said. "If you cut spending $100 million, you've got to raise taxes $100 million."

But Wilson, in a reference to the ongoing election campaign, also said, "I don't think we can politically deal with this problem until after October, maybe November."

Three council members -- Chairman David A. Clarke (D), Charlene Drew Jarvis (D-Ward 4) and John Ray (D-At Large) -- are running for mayor; Wilson is running for council chairman; Betty Ann Kane (D-At Large) is running for Congress; and five others are running for reelection.

All candidates are confronting a growing tax revolt in Northwest Washington and other upper- and middle-class neighborhoods, coupled with pressure from unions and other groups to maintain government programs and workers.

At the same time, the financial situation for the city has taken a nosedive as once-plentiful tax revenue, generated by steadily rising property assessments, has leveled because of an economic slowdown that has confounded local and state governments along the East Coast.

Elected officials "are reluctant to deal with the problem head on," said Atlee E. Shidler, president of the Greater Washington Research Center, a think tank that has studied the city's financial problems. "It is not for lack of intelligence, it's not for lack of knowledge. It is lack of political will, but that's not surprising."

The nature of the political bind confronting the council was on full display at its meeting last Tuesday, when council members considered several measures to deal with the city's financial problems.

Early in the meeting, the council refused to consider a range of budget cuts proposed by the mayor, telling Barry that he has the authority to make the cuts on his own. The council also indicated that it would not go along with his proposal to impose a new utility tax and higher taxes on commercial property.

Then the council acted on voice vote to approve a deep cut in the property tax rate, from $1.06 to 96 cents per $100 of assessed value. Although the move was designed to compensate for rising property assessments, it will cost the cash-strapped city as much as $3 million this year and $11 million in 1991.

Finally, in the last action of the day, council members voted 7 to 5 to support a proposal that would have limited the mayor's authority to carry out an employee furlough, one of several steps administration officials say they intend to use to close the budget deficit.

The measure failed because it did not gain the two-thirds support necessary to approve an emergency resolution, but some council members accused their colleagues of trying to tie the mayor's hands at the same time they are refusing to raise taxes.

"That's just hypocritical," said Wilson, who voted to allow the mayor to go ahead with furloughs.

But Kane, who opposes the furlough plan, said there was nothing inconsistent in the council's votes, calling furloughs "counterproductive" and "unnecessary." She also discounted the need for new taxes.

"I don't see a will on the council for taxes. I really don't," Kane said. "The mayor is overspending the budget. If the mayor would stick to the budget, then we would not have this problem."

Robert Pohlman, deputy mayor for finance, disputed Kane's analysis, saying that the city recently revised its tax collection estimates downward by $55 million because of the flagging economy.

"If every agency lives within the budget, we'd have a $55 million deficit," he said. "Just living within the budget does not solve the problem."

Pohlman added: "We didn't create the revenue shortfall. Neither did the council. But we tried to address it . . . . The message I'm getting is don't expect taxes or getting believable, real cuts that affect programs and services until after the election."