The Cambridge City Council early yesterday morning finished preliminary considerations of a city budget that, if passed next week, would force the layoff of only 86 city workers and more than 100 school employees.

Routine Vote

Next Monday's vote should be "formal and routine," city councilor David Wylie said, adding that the council examined the budget line-item by line-item and voted not to reconsider most of the details.

The budget calls for fewer layoffs than most city officials had predicted in the wake of Proposition 2 1/2. As many as 600 workers had been expected to lose their jobs but revised projections of aid that may come from the state legislature allowed the budget to increase. Wylie, chairman of the council's finance committee, said yesterday.

State Aid

City Manager James L. Sullivan, in a letter to the council last week, predicted that state aid and excise tax revenues would permit an addition of more than $2 million to the city budget he recommended earlier in the spring.

"I had several conversations with him in which I indicated $2 million would not cover what the majority viewed as essential needs." Wylie said, adding that after the discussions the manager decided to raise his projections of expected state aid by $500,000.

"He decided on his own that would be all right, based on his latest intelligence from the State House," Wylie said. In the past week, Democrats in the State House have threatened to bolt from the leadership and increase state aid.

"The only questionable part of his estimate is about $700,000," deputy city manager Robert Healy said yesterday, adding he agreed with Sullivan that the state was likely to provide the money.

The budget--if passed next week and supported by the state funds--would restore to their jobs all city police and firemen who had been sent layoff notices. But ten fire department positions and 14 police department positions that are currently vacant would not be funded.

If the state aid does not come through, "we'll have to make cuts, and as early in the fall as possible," Healy said.

The predicted additional state aid allowed the council to restore several other items to the budget. They include:

If the predicted state aid allowed the council to restore several other items to the budget. They include:

*$1.6 million for the school department, which will allow funding of the budget superintendent William Lannon says is the smallest "educationally sound" figure.

*$297,000 for the city's rent control program. The remainder of the cost of running rent control will come from a fee imposed on landlords or tenants.