The Montgomery County Council and Executive James P. Gleason this week decided to examine the possibility of lowering the property tax rate in Montgomery County next year.

A lower tax rate would be one way to pass along to tax payers the benefits of what the county office of finance estimates will be a $54.2 million increase in a tax revenue over last year's income of $491.6 million. Last August, the county estimated the increase would be only $27.4 million over last year's revenue.

John L. Menke, the outgoing president, said the council would be in favor of a tax rate cut. Arthur Spengler, the legislative fiscal officer for the county, said the feasibility of such a cut would depend on whether or not it was practical in light of other demands for money.

The money might be needed for the school system, the county government or other agencies, Spengler said.

"It's a matter of priorities, and that's what the budget process will be about," he said. "How do we allocate the money?"

County agencies must give their proposed budgets to the council in March. Hearings follow, and the budgets will be finalized May 15, said Spengler. Any tax rate cut would not be set until June, he said.

Council member and economist Neal Potter said, "We really need to reduce the property tax rate about 10 per cent. But I don't see any way we can go that far, I think we can go down about 5 per cent."

Assessments went up 10 per cent this year, and they are expected to continue rising at that rate next year, said Spengler.

Rising assesments would cancel most of the dollar savings a tax rate decrease of 5 per cent would bring to property owners. The cut, however, would offer some relief by preventing property taxes from rising as fast as they have been in the past years.

A 5 per cent decrease would mean taxes would be lower by 20 cents for every $100 of assessed value, according to potter. A person paying at the rate of $4 per $100 would pay $3.80 per $100 instead, he said.

Potter said only a few people might actually end up with lower property taxes due to a tax rate decrease, and these would be property owners whose assessments did not rise. Potter said some apartment house owners might fall into this category.

Council member Jane Ann Moore suggested, instead, that residents be given a tax rebate from the extra revenue expected.

"The county attorney is looking at whether or not we can legally do that," said Menke. He added that there are practical problems with such a rebate. "When you mortgage pay the property tax. Do they get the rebate?" he said. "What do you do when property has changed hands - who gets the rebate?"

Council member Norman Christeller told the council that the rebate check for the owner of a house that cost $50,000 to $60,000 might possibly be as little as $20.

Menke said the increase could allow the council to go to a "somewhat more conservative fiscal policy." He noted that the county counts on federal money for the budget every year even though it never knows how much, if any, of it will come through.

"We get about $60 million in federal and state grants," said Spengler. With the help of the surplus, the county could hole back about $5 million of that each year for the following budget if federal money is pinched the next year, he explained.

Spengler said the extra money could be used to fund the added cost of agency programs. Because of inflation, the same programs funded this year by the county will cost $36 million more to fund in fiscal 1979, he said.

The revenue increase is due to several factors. Reassessments contributed $6 million more than expected, according to a finance office report.

Because Montgomery County recently won a court decision that allows it to tax the IBM and Xerox companies more than in the past for the business machines they lease to other firms, $3.4 million in revenue will come in that was not expected in August.

In addition, $730,000 in federal funds for repairs made by the county in the aftermath of Hurricane Agnes which hit the area several years ago has finally arrived.

Audits of the fiscal year 1977, which ended last June, recently revealed a surplus of $7.64 million from agencies that spent less than was appropriated for them.