Montgomery County Executive Neal Potter recommended yesterday that government workers and school employees forgo cost-of-living pay raises to avert a fiscal crisis he said was so dire it could mean catastrophic cuts in county services and some layoffs.

If workers don't give up the salary increases, Potter said, the county could be faced either with massive layoffs that would cut the county work force in half or dramatic increases in property tax bills.

"It's a formidable problem . . . a shock to all of us," Potter said as he outlined his suggestions on how to close next year's budget gap, estimated at $175 million. Next year's total county budget is expected to be about $1.5 billion.

Even if the salary raises are frozen, Potter said the county will still have to eliminate 1,041 positions out of a full-time county work force of 6,600 and a teacher corps of about 7,000. About half of the positions he proposes to eliminate are currently vacant, Potter said, and county officials predict that only about 50 employees would actually lose their jobs.

Potter said he will ask the state legislature to give Montgomery County the authority to impose a 1 percent tax on vehicles and he will recommend an increase in a variety of other taxes and fees, including a doubling of the county beverage container tax.

Potter's recommendations are not set in stone. He has until March 1 to submit his 1992 spending plan to the County Council, which will make the final decisions on the budget.

The proposal to allow the county to impose new taxes has received a decidedly cold shoulder from state lawmakers in Annapolis. And Potter's suggestion that employees relinquish raises set to take effect in July was blasted by union representatives.

"It's devastating," said Mark Simon, president of the union representing 7,500 teachers, who are set to get a 6.5 percent raise in July. The Montgomery County Education Association was among Potter's most ardent supporters in his successful bid to oust Sidney Kramer as county executive in last year's elections.

Asked if he regretted backing Potter, Simon said, "We're going to leave that question unanswered at this point in time. But if you asked me today, the answer is yes."

At one point in the campaign, Potter held a joint news conference with leaders of the county's three major employee unions to declare he would consider renegotiation "only in the most dire and unlikely of fiscal circumstances" and as "a last resort."

"Mr. Potter is reneging on a campaign promise made to us . . . obviously the last resort to him is to consider raising taxes," said Gino Renne, a vice president with the union representing 3,500 white- and blue-collar workers set to get a 6.2 percent increase.

Potter countered that there would have to be an across-the-board increase of 31 percent in property taxes to make up the gap of $175 million. He said that when he made his comments during the campaign, he had no idea how serious the county's fiscal problems were.

Potter noted that his proposals are based on an expectation that more money will be collected from property taxes. But Potter said he wanted to abide by the mandate of last fall's election in which voters approved a ballot question limiting property tax increases to the rate of inflation unless seven of the nine council members concur in raising them.

"Any increase in the property tax for 1992 is dead on arrival," said Council President Isiah Leggett.

Leggett said, "We are facing some very stark choices. Either we go along with massive and crippling layoffs or we reduce or eliminate the COLAs {cost-of-living adjustments} . . . . I would say essentially we have no choice."

Some union officials characterized Potter's budget pronouncements as jawboning: floating a trial balloon to test reaction to the proposals.

However, Blair Ewing, president of the Board of Education, said that he takes seriously the financial problems as outlined by Potter and that he will cooperate in trying to come up with cuts.

"In the past at this time of the year, county officials would gather and shake heads and say there is no money. But at the end of the year there would be a nice surplus. I am convinced that this is not the case this year. There is a problem. I believe him," said Ewing.

Potter is projecting a budget for the schools of $714 million, only 1.5 percent more than the current budget and nearly $70 million less than Supterintendent Harry Pitt said is needed to maintain services.