The $130 million in spending cuts ordered by Mayor Sharon Pratt Dixon will result in reductions of up to 40 to 50 percent in housing and economic development programs and funding for the arts and the Office of Latino Affairs, District officials announced yesterday.

City officials warned that the cuts, part of an effort to offset a projected $300 million deficit, could lead to the curtailment or elimination of popular programs, including ones that help low-income residents pay their rent and purchase homes.

Job training and placement programs, which have become more popular as the economy has worsened, also are in jeopardy, officials said.

"We're talking about the solvency of the District of Columbia," said Robert Pohlman, deputy mayor for finance, in defending the reductions.

The tough new measures prompted immediate complaints and cries of outrage from several constituency groups, including the politically active Latino community and school board officials, who warned of possible layoffs of teachers.

Even as her aides were announcing details of the cuts, Dixon retreated from one of her major campaign pledges, to resolve the deficit crisis by immediately eliminating 2,000 middle-management jobs from the 48,000-member work force.

Dixon spokesman Paul Costello said the mayor remains committed to eliminating those positions, but now realizes the employees could not be identified and removed in time to have an effect on this year's budget deficit. The fiscal year ends Sept. 30.

"I don't think she had any clue that the fiscal problems were as deep as they are," Costello said. "You're not going to find 2,000 jobs having any kind of impact on the deficit on the first take. That's not reality."

Dixon, who began the day with a White House meeting with President Bush and his top aides, later addressed 1,500 D.C. workers at the Reeves Municipal Center. She sought to strike a compassionate tone while reminding workers that "we're in for tough times."

"We have got to tighten our belts so that we can get beyond this," Dixon said. "If you don't deal with it at the outset, it only grows and grows and grows."

Dixon defended her deficit reduction plan, announced Thursday, which includes canceling pay raises totaling $63 million, increasing user fees and seeking an additional $100 million from Congress.

"There is no money {for raises}, believe me," she said, adding, "I believe if we take this approach, we are not going to have to deal with RIFs {reductions in force} and furloughs, if we are able to succeed on all fronts."

At a briefing for reporters earlier in the day, Pohlman also played down the possibility of layoffs to deal with the fiscal 1991 deficit. Civil service rules make it difficult to fire workers immediately, and the city also is liable for sizable severance payments, he said.

"For 1991, that's a limited option," Pohlman said.

However, he did not rule out the necessity of such work force reductions in the near future, especially if Congress does not appropriate the additional $100 million. He also said agencies have the option of eliminating up to 2,000 temporary positions to meet their deficit reduction requirements.

While Dixon has promised to minimize the impact of the cuts on basic city services such as trash collection, police protection and public health, the budget reductions unavoidably will reduce the scope and reach of long-standing and politically popular programs, according to Pohlman and budget director Richard C. Siegel.

Virtually all agencies were hit under the mayoral order, but Dixon appeared to reserve the deepest cuts for housing and economic development programs, which also receive extensive financing from the federal government. Throughout the administration of Marion Barry, the city added millions of dollars in discretionary local funds to these programs. Dixon essentially has ordered a drastic cutback in the local financing of those programs.

For instance, Dixon has ordered a cut of more than $6 million, or 45 percent, from city spending for the Department of Housing and Community Development; $2.3 million, or 45 percent, from the Office of Business and Economic Development; $15 million, or 40 percent, from the Department of Employment Services; and $1.1 million, or 50 percent, from the Housing Finance Agency.

City officials said those cuts could translate into reductions in such areas as the Tenant Assistance Program, which helps poor people subsidize their rents; job training programs; and the home purchase assistance program, which helps home buyers make down payments.

But the exact impact will not be known until agencies report back to Dixon in two weeks on how they intend to implement the reductions. Dixon then would need to approve the proposals, which in turn would be reviewed by the D.C. Council as part of a revised budget this spring.

School board President R. David Hall (Ward 2) said that if the council approves Dixon's request, the school system will be forced to lay off several hundred teachers and administrators to reach the $10 million in cuts she wants.

Hall said he plans to meet with Dixon on the pay raise issue, saying the city's teachers, whose contract expired last fall, need pay that matches what teachers in suburban schools receive. "If we don't improve salaries, all the rhetoric we've heard about quality education won't amount to anything," Hall said.

Council member Charlene Drew Jarvis (D-Ward 4), chairman of the Economic Development Committee, said the cuts envisioned in housing and economic development were so large that programs would necessarily have to be scaled back.

"The federal dollars in the past few years have been declining dramatically, and critical programs will be affected by reducing the local taxpayer dollar," Jarvis said.

Dixon also targeted smaller yet politically popular agencies, such as the Office of Latino Affairs, the D.C. School of Law and the Commission on the Arts and Humanities.

The Latino Affairs Office is slated for a 43 percent reduction in its $2 million budget. Pohlman said the city's financial managers believe much of this can be accomplished by ending the Latino Initiative, a four-year-old program in which the office funds efforts to hire bilingual workers throughout the District government.

Pohlman said city agencies should be funding such efforts as a matter of course, but Sonia I. Gutierrez, a leading Hispanic activist, said most agencies would simply drop the matter without the special funding.

"This is outrageous," she said of the proposed cuts. "The majority of these agencies could really care less, and they give our people such a runaround . . . . This really gets me angry."

William L. Robinson, dean the of the D.C. Law School, also reacted with dismay to the mayor's order for a 28 percent cut in the school's $3.9 million program. "It would cripple us," he said.

Any proposal to cut the law school budget faces an uncertain future because of the strong support for the school on the council, particularly from Hilda H.M. Mason (Statehood-At Large), chairman of the Education Committee. But Robinson and other agency heads expressed sympathy for Dixon's predicament.

"She's faced with a very difficult task," he said. "She's got to maintain effective government operations at the same time she reduces expenditures . . . . I believe that I can make our case objectively, and I would hope that our case is given careful consideration."

SELECTED DEPARTMENTS IN CURRENT BUDGET YEAR -- IN MILLIONS

Department........................Revised..Current...% Change

..................................Ceiling..Ceiling

Mayor's Office.......................$1.5.....$1.9.....-22.4%

Department of Housing and Community

Development..........................$7.7....$14.1.....-45.2%

Public and Assisted Housing.........$28......$31.8.....-11.9%

Department of

Employment Services.................$21.9....$36.9.....-40.5%

Office of Business and Economic

Development..........................$2.7.....$5.......-45.3%

Fire Department.....................$97.8...$103........-5.1%

Corrections........................$252.7$..$252.7.......0

D.C. Law School......................$2.8.....$3.9.......-28%

Arts and Humanities..................$1.7.....$3.5.....-51.5%

Department of Human Services.........$718...$735........-2.4%

Office of Latino Affairs.............$1.1.....$2.......-43.2%

D.C. Council.........................$7.8.....$8.7.....-10.1%

Public Schools.....................$518.8...$528.8......-1.9%

SOURCE: Mayor's Office