February 14, 1981

The heavy rains and balmy, snow-melting temperatures of midweek combined to push water reserves in New York City's three reservoir systems to nearly 40 percent of capacity, officials said yesterday. Francis X. McArdle, the city's Environmental Protection Commissioner and head of its water-conservation program, said: ''No one should interpret this good news as a sign that the drought is over. It gives us only another two weeks of life. We have a long way to go.''

President Reagan has rejected a plan to make his proposed 10 percent cut in personal income taxes retroactive to Jan. 1 and instead plans to ask Congress to begin the decrease on July 1, Administration sources said today. Mr. Reagan still plans, however, to propose that increases in depreciation allowances for business be retroactive to Jan. 1 so that businesses will not delay investments that the Administration hopes will stimulate the economy. The decision came to light today as Mr. Reagan heard the final budget-cutting proposals of his Cabinet officers and budget director in a series of meetings at the White House. Mr. Reagan also overruled as politically undesirable a last-minute attempt to decrease the tax on investment income. Accepts Foreign Aid Compromise In addition, the President ordered further economies in the military budget, which he intends to increase, and accepted a compromise foreign aid proposal that seemed to mark an end to the dispute between Secretary of State Alexander M. Haig Jr. and David A. Stockman, the budget director.

The New York City Buildings Department no longer makes enough inspections of construction projects to know whether fire and safety codes are being met, according to department officials, architects and engineers. They also say that much construction is done without permits and that such jobs, in addition to creating potential hazards, cost the city millions of dollars a year in lost fees. The Buildings Department, because of legal and policy changes and a reduction in its employees caused by budget cuts, has turned over much of its traditional role of protector of the public to the various professions in the construction industry. Some Cutting of Corners Some officials, architects and engineers have asserted in interviews that under this honor system builders and contractors have sometimes cut corners by using inferior materials and doing some work haphazardly or not at all. Concern was also expressed in the interviews that some in private industry who are charged with doing inspections are routinely approving work they have not inspected or know to be in violation.

The prices that producers charge retailers for finished goods rose by nine-tenths of 1 percent last month, a significant acceleration from the pattern of last fall, the Labor Department reported today. The principal cause of the acceleration was rising prices for fuel oil and gasoline, which are expected to rise even more sharply in coming months because the figures released today did not include the effects of President Reagan's decontrol of domestic oil on Jan. 28. In December, the prices charged by producers of finished goods rose by five- The dollar surged in value in both Europe and the United States amid hectic buying. Page 29. tenths of 1 percent. The increase had been seven-tenths of 1 percent in each of the two preceding months.

The four charities that were given $1 million each by the Department of Energy just before the Carter Administration left office said today that they had already distributed much of the money. They expressed dismay at attempts by the Government to get it back. The money, from the settlement of suits alleging overcharges by the Standard Oil Company (Indiana), more familiarly known by the name of its gasoline, Amoco, was provided to the charities to help the poor pay fuel bills. The distribution was ordered by Paul L. Bloom, who was the Energy Department's special counsel. He defended his action today, saying that the money could in no way be considered taxpayers' money.