Lawyer William T. Newman Jr. was elected chairman of the Arlington County Board by his colleagues yesterday and urged greater community activism in the face of dwindling funds for programs.

Newman, who is the first black chairman in this century, proposed two initiatives: creation of The Arlington Fund, a community foundation to solicit and channel bequests and grants to county charities, and establishment of a countywide mentor program for young people.

"The spirit of Arlington makes me proud to be a lifelong Arlington resident, proud to be a part of a government that elevates service to others above selfish pursuits and proud to be a chairman of a board in a community that values civic spirit above ethnic and racial differences," he said.

Newman's election to the chairmanship, which is a one-year position, was greeted with sustained applause from about 60 friends, relatives, county officials and community activists who had gathered for the board's annual New Year's Day organizational meeting.

The meeting is a point of pride for Arlington officials, who tout their no-nonsense approach to government. The board's only concession to the holiday is to start at 11 a.m., two hours later than usual.

The board yesterday also elected longtime member Ellen M. Bozman (I), 65, to serve as vice chairman. Bozman said budget problems will mean that some programs will have to be shelved.

Other board members said they will continue to work for more affordable housing, greater community participation in civic affairs and improvements to the environment.

Newman, 40, a Democrat, acknowledged the financial problems facing Arlington -- a $30 million shortfall is predicted for next year -- and did not rule out tax increases.

"Revenue reductions will force us to cut expenditures to the point where we must reduce or eliminate worthwhile community services or we must raise additional tax revenue, or do both," he said.

However, Newman said later he "would not foresee" increasing the real estate tax rate.

Despite the county's budget problems, Newman sounded optimistic. "Our county enjoys a low unemployment rate. And new businesses and government agencies are locating here. Arlington's services rank at the top in the region, and our tax burden is still at the bottom," he said.

Newman said a task force will be appointed in the next few weeks to study creation of The Arlington Fund. Along with dispensing money to worthwhile causes, the foundation could serve as a nonpartisan forum for resolving county problems and disputes, he said.

The time he spent last year speaking to schoolchildren convinced him that mentor programs are "vital for the well-being of our children, especially for Arlington's minority young people," Newman said.

Although there already are mentor programs in Arlington, including some in the schools, there is a need for a countywide clearinghouse for such efforts, Newman said.

John B. Robinson, director of the Martin Luther King Jr. community center, said the black community has made few demands of Newman, but "we'll be calling on him." He listed drug abuse, affordable housing and minority school achievement as concerns.

Newman said, "I hope the {black} community says I'm one of them." But he added, "I understand more than ever that I represent everyone."