Back in January, when suburban Maryland was under a blanket of snow and ice, Prince George's County Executive Winfield M. Kelly Jr. began work on the 1978 budget. He took a look at the county's revenues, checked on state and federal aid, added up salary costs and began issuing dire warnings that the county was in a desperate fiscal situation that could lead to a 26-cent increase in the county property tax.

As the weather improved, so apparently did the budget climate and by last week Kelly and the county council were able to adopt a budget that not only avoided any tax increase but provided for a cut in texas. So surprising to many was the result of the long budget struggle that the Prince George's council received a call from Montgomery County council member Mary Ann Moore asking, "How did you do it?"

What the Prince George's council did was to reduce the county tax rate by 15 cents without producing, council members claimed, severe cutbacks in county services.

The council clipped $5 million out of Kelly's budget of $418.7 million for a 10-cent reduction on the property tax trimmed $2.54 million from the Maryland National Capital Park and Planning Commission budget, which took 5 cents off the park tax. This will make the property tax rate $3.27 per $100 of assessed valuation and 36.97 cents per $100 on the park tax.

Granted, the reduction will be offset by a 15 per cent tax on telephone services, and by ever-increasing assessments on property, as protestors at the final budget adoption session Friday made evident. But the overall effect is positive, council members quickly claimed, noting that it was the first county tax reduction in five years.

The council was able to obtain the tax reduction by cutting programs throughout the county system. The biggest cut came from Laurel hospital - $2 million for operating costs. Other cuts were $600,000 from the contingency fund, a $528,000 payment for interest on Metrorail revenue bonds, $154,000 from the sheriff's department, and $1.1 million from the schools.

Council member Francis B. Francois breathed a heavy sigh of relief when asked how he felt about the budget.Like the rest of council, Francois had attended work sessions week after week, going through program after program looking for safe and effective budget cuts.

"I may not be in full agreement with all the expenditures we have in this new budget," he said. "It really doesn't do as much to reduce the property tax as I would like. But to make more cuts, that would really hurt services."

Before this year's budget was adopted, Kelly and council members had spent months warning of increased taxes and reduced services.

In January, Kelly announced the suspension of $21 million in construction projects, including medical clinics, libraries, roads, bridges and a police academy. He said he wanted to save $2 million on interest payments that the county would be obligated to pay after the sale of bonds for the various projects.

Later, Kelly also announced a freeze on government hiring and on all wages.

Then he went to Annapolis and raised a storm about county finances. He told the General Assembly the property tax rate would increase by 15 to 26 cents unless he got additional revenues from the legislature.

Kelly supported passage of a "tier tax," enabling the county to tax apartments, homes, and commercial buildings at different rates; a "piggy-back" tax on the state income tax to be returned to the county, and a "home-rule" tax that would allow the county to tax telephone usage.

The legislature passed only one of the Kelly-supported proposals, the home rule tax, that permits the telephone tax and would produce about $7 million for the county. Kelly decided to rescind the renter's tax this year, for a loss of about $6 million, howeverm so the revenue picture remained about the same.

The legislature also passed a bill that would allow a tax rebate for anyone who has had more than a 15 per cent increase on a property assessment within the past year. The county may loose up to $1.1 million on the rebate.

Kelly's "doom and gloom" tune changed in March when he formally proposed his 1978 budget. Instead of a property tax increase, Kelly said the tax rate would remain unchanged. He also said he could fund many of the projects he had earlier eliminated, including the Laurel Hospital's operating costs and the Bowie Ambulatory Care facility.

The county had saved about $1.3 million in interest payments by bond sale delays, he said, and by "tightening up the finances of the various county agencies and departments," he was able to balance the budget. Kelly also counted a $3.3 million surplus found by the school board in February.

Unfortunately, Kelly had counted on balancing the budget with $3.5 million in state aid to education. But legislation granting the aid was not passed and that revenue never materialized.

In April, council members were faced with having to cut an additional $3.5 million to maintain a balanced budget.

As it turned out, they managed to cut that much, and more.

This year, the council adopted a new budget review process similar to the zero-based budgeting. It required directors of county agencies, departments and the school board to show the council the effectiveness of a program before deciding whether the program merited continued funding.

Council chairman William B. Amonett said, "the budget sessions this year will be accountability sessions."

And, in many cases, they were.Sheriff Don E. Ansell lost funds for three clerical positions. Library director William R. Gordon appealed for more funds than Kelly had recommended in order to keep all libraries open - he lost the first round but later negotiations between Kelly and the council increased the library budget by $100,000 and all the libraries are likely to remain open.

One major surprise came from the school board in early May when the board found a second surplus - this one of $2.9 million to help close the deficit gap.

At recent budget work sessions, council members urged dapartment heads to use "imaginative management" in the face of the proposed cuts. "It's going to hurt, but you can do it," said Francois to police chief John W. Rhoads. The council had just taken $250,000 from the budget. "I've taken one of your paper clips in revenge," Rhoads countered.

The police department was only one of the county agencies hard hit by the council's security. Program Planning and Economic Development had more than 32 per cent cut from its budget; Department of Personnel, 20 per cent, and the sheriff's department, 3.2 per cent.

After the tentative votes on the budget cuts were taken last week, the council members returned from a meeting with Kelly, purportedly to "iron out some things" with him. The council members were tired but elated. Somewhat in a daze they told reporters about the 15-cent tax decrease. They were weary, they said, after the long deliberations of the previous few days, some with Kelly, some without him.

In the negotiations with Kelly, they had been able to put money back into the school budget for teachers' salaries, money to bolster the mental health program. These funds came from the budget cuts the council had made earlier in other departments.

Kelly aide John Lally explained the constant fluctuations in budget projections this way: "In January, you have to add up the expenditures versus the revenues. When you have a hole, and we did, of $13 million between them, that equates into a 26-cent tax increase. If you don't fill the hole, you have to face the doom and gloom."

Francois said, "With multiple funding sources, state and federal aid as well as county sources, it is difficult to predict the revenue picture. The only magic in the process is that by May 15 we must make a dicision.

"As to what's really going to happen next year, it's only our best educated guess."

Council member Parris N. Glendening said, "We will have produced adequate basic services but with a sizeable tax decrease for the taxpayer. "It's a magic trick to keep services high while cutting taxes," he continued. "The 60s were a period of affluence in the county and for the budget. Now it's the politics of scarcity."