The newly elected Montgomery County Council reconvenes next month facing a huge budget shortfall, fiscal uncertainty and serious concerns about funding new projects.

After its holiday recess, the County Council meets on Jan. 14 and will prepare for what many say is the toughest budget year in recent memory. So far, council members have more questions about the county's financial future than answers.

And they're dealing with sobering economics: The county has a $300 million budget deficit and the state, which allocates significant funding to Montgomery for local initiatives, is experiencing a $500 million budget gap of its own.

"This is going to be an extremely -- if not extraordinarily -- difficult year," said County Council President Michael L. Subin (D-At Large). "My primary objective is to try to find ways not to retrench in the areas where we've made significant gains over the years."

Subin warned ambitious constituents not to think big. "I frankly don't see this year as a year of initiatives," Subin said. "It's a year of survival. Unless there is a significant turnaround, there are not going to be any improvements this year anywhere -- not in education, [health and human services], public safety. We're thinking of ways to preserve our gains. That's the greatest challenge we face."

County Council member Marilyn Praisner (D-Eastern County) isn't optimistic either. "It's early in the process but we're watching what the state does," said Praisner, who chairs the council's management and fiscal policy committee. "It's not clear what the state will do. That's our major concern."

State officials predict they will have to slash at least $1.2 billion from Maryland's budget for next fiscal year and may be forced to raise taxes and lay off state workers. In addition, the state has a $500 million budget deficit in the fiscal year that ends in June.

For the current fiscal year, Montgomery County expects to receive $347.9 million from the state. Next fiscal year the county hopes to collect $417.2 million.

Praisner said the county is not receiving the same amount of revenue from income taxes as in past years, and, simultaneously, the cost of operating government is steadily increasing.

County Executive Douglas M. Duncan (D) will offer his proposed budget in March. After public hearings, the council will adopt a budget in May.

In the meantime, Subin said, county residents and local leaders should brace for the worst. "As we used to say in the Navy," he said, "stand by for heavy rolls."