Four years ago residents of Prince George's County voted by a 3-to-1 ratio to impose fiscal restraints on the size of the county budget with an absolute limit on property taxes. They called it Tax Reform Initiative by Marylanders, or TRIM, and that year they also elected a fiscally conservative county executive, Lawrence J. Hogan, to make it work.

At budget time every spring since then, the county agencies, especially the schools, warned of layoffs as the budget increased slower than the rate of inflation and Hogan actually cut tax rates. But as they managed to live within the restrictions, Hogan and other TRIM supporters suggested that the agencies had been crying wolf.

This year, the final year of Hogan's tenure as county executive, has produced the collision between TRIM and the demand for county services that TRIM opponents had predicted as early as 1979.

So last week, with the wolf actually at the door, members of the school board tearfully voted to cut almost 10 percent of the staff of the nation's 13th largest school system because of Hogan and the TRIM amendment. And the long-threatened reduction in force is about to become a reality.

The schools are bearing the brunt of the TRIM restrictions because they represent more than half of all spending by the county. But other departments have suffered, too. Libraries, health services, transportation--all county agencies--have been operating under a virtual hiring freeze for the last four years. Requests for additional employes have required approval directly from Hogan's chief executive officers.

Even the beneficiaries of Hogan's crackdown on the schools, the safety forces, complain that they are merely getting enough extra money to stay even with inflation. The increased appropriation for the police department, for instance, will provide funds only to hire enough new officers to offset money spent last year on overtime that was made necessary because of a shortage of police.

The school board had counted on the Democratic council to restore what the Republican executive took away, as had occurred in previous years. The board even waited until three weeks before the final council vote before putting possible cuts on paper, lest the council believe the schools could make do with less.

But this year, the council failed to provide. After two days of intensive discussion, the council scraped together a mere $5.4 million extra, not enough even to bring the board to this year's funding level.

"Where do you cut to come up with $30 million," said council member Parris Glendening, echoing the feeling of many council members. "The total police budget is $35 million. How can you take massive cuts in other areas when there's minimal support for programs for the elderly, and the law enforcement problem is serious. Every index we have is that that's a major concern of county citizens."

Glendening, the only announced candidate for Hogan's chair, is not the only politician who can read an index. For all its hand wringing in passing on the school cuts, the council has made no move to place an amendment to TRIM on the ballot this fall for fear it would not pass.

"If they wanted to back their words and crocodile tears, all they would have to do is put it on the ballot," said school board member and County Council candidate Al Golato. "I think they feel that since less than 30 percent of people have children in the school system, the 70 percent who don't would be opposed to it. It's political," Golato said.

Bill Goodman, the author of the TRIM amendment, said he would welcome seeing an effort to undo TRIM placed on the ballot this November.

"It would give the public a chance to reaffirm their faith in TRIM and vote the council out at the same time," said the longtime political gadfly.

Battered by the threatened layoffs and facing dissent within the ranks over how to respond, the county teachers, the largest public employe group in the county, have postponed their candidate endorsements in this election year because of the budget crisis.

"The rules of the game have been changed," said union president John Sisson. "We haven't fully assessed what has happened . . . , who of the incumbents are really on our side and who has been feeding us a line," Sisson said.

Sisson recognized that the voters with a direct interest in the schools are not only a numerical minority but a racial minority as well because the school enrollment is 52 percent black. "We have a greater constituency of people in the black community, but these people don't vote," said Sisson, who plans a voter registration drive targeted at the black community.

With the prospect of 900 school employes joining the ranks of the unemployed, council members have joined school officials and union leaders in calling for a modification of TRIM. But they disagree on what should be done. Meanwhile, Hogan, along with the original TRIM proponents, maintains that TRIM does not need amendment this year and that school officials must learn to live within their means.

A loose coalition of Parent-Teacher Associations and other citizens are gathering signatures for a measure called "Plus 4" that would empower the council to raise property taxes up to 4 percent per year. But most observers feel that even if the measure were successful it would not raise enough to prevent another budget crisis next year.

What all sides agree on, however, is that the money to fund requests from all county agencies was simply not available under the TRIM-capped budget. And the school system, comprising 58 percent of the county's half-billion-dollar budget, has exposed TRIM's impact for the first time. This year's crunch also has renewed the philosophical and political debate associated with TRIM.

It began in March when school superintendent Edward J. Feeney submitted a "bare bones" budget of $337.4 million, an increase of 9.4 percent over the previous year, that included a reduction of 323 staff positions largely by attrition. Hogan immediately declared the budget "unreasonable and unfundable," having already explained to all the departments that they would all have to share a skimpy 3 percent revenue increase.

But the bulk of the school board's increase was to go to items the board did not consider readily negotiable: $16 million for a 7.2 percent raise for teachers and other employes according to the terms of a year-old contract; increases in overhead cost such as fuel, maintenance and transportation that school officials said do not decline with the number of pupils. School officials also had to appropriate $2.5 million for 111 buses to comply with Maryland law. Feeney also budgeted an additional $3.6 million for long deferred maintenance projects.

Hogan quickly sliced the entire increase and recommended that the board get $300.9 million. While that would be less than the current budget, Hogan argued that the teachers' raise was exorbitant, and with a declining school enrollment and attrition, the schools could and should do with less.

"We would start every year and give all of our managers goals, especially funding availability," said Hogan last week. " They just blithely ignored it and came forward with their bloated unfundable request . . . . They don't live in the real world. Somehow they think there's magic money for them."

"Everybody's surprised, everybody dreams of the days of the old one-room schoolhouse and thinks we can get by with less," said school spokesman Brian J. Porter. " Last week's announcement was a splash of reality for all those people--and if you think this is bad, wait until you see next year."

School principals have already identified more than 400 teaching positions that will be targets for elimination among the 900 layoffs. RIF notifications are set to be mailed by Friday. Among the targets are half the elementary school librarians, 40 percent of the athletic budget, 35 percent of the reading teachers and all new textbooks.

"Never did I ever believe we'd be talking about cutting all elementary musical instruction. This is unreal," said school board member Bonnie Johns. "This is really a bad dream.