County Executive Jack B. Johnson (D) gave his first State of the County address Friday before the Prince George's County Chamber of Commerce. He made an indirect call for abolition of TRIM, the voter imposed tax cap that has limited county spending since its approval in 1978.He also offered the outlines of his budget proposal, which will be unveiled this month. Excerpts appear below:

Today, I am here to talk not just about the economy, but about the future for a county that is unique and diverse. . . .

I can assure you that just as we have charted a new course in coalition-building, we will charter a new course for excellence in government. . . .

Since taking office a mere three months ago, I have devoted countless hours to rethinking our institutions and how they can better serve the people. I have redefined the role of our department heads. In the coming days, I will announce some new appointments in several departments.

Recently I established an inter-agency livable communities task force, where staff works across agency lines to provide creativity and innovation to solve long-standing problems.

Together they are developing the specifics of bringing together government, the business community, the faith-based community and community organizers to help clean up our county and make it more aesthetically sound. Pooling resources and talents is the new model.

I have also directed my staff to create economic clusters to bring together the many agencies and sub-agencies having responsibility for economic development. Nearly a dozen separate government offices were not talking or working together to find a unifying theme or direction. That is changing. . . .

As you know, we spend most of our county budget on education and public safety.

The Board of Education receives $1.1 billion dollars -- approximately 64 percent of our budget.

Public safety receives $227 million -- approximately 13 percent of our budget.

As you can see, the county is spending a very small portion of its resources on environmental and human services. We need to increase our total resources, so we can provide these vital services to the community.

For example -- we spend just $26 million or 1.5 percent of our total budget on human services.

This is a quality-of-life area. Yet we are treating it as an afterthought.

We must arrest this trend and do our part to ensure that the quality of life for Prince George's County residents is second to none.

Now, I'd like to talk about the "supposed" surplus. I heard about the $126 million that was sitting there that could provide all the new and expanded services to our residents. Let me tell you, we have cash reserves, but we have no surplus monies.

What is not said is that nearly $80 million of that, or 5 percent, is required to be kept in reserve by the county charter as the county's "rainy day fund."

An additional 2 percent, or approximately $35 million, is kept in reserve to help us retain our AA bond rating, which allows us to borrow money at a lower rate for capital improvement projects, such as schools, roads, parking structures, and others. We cannot do anything to jeopardize this bond rating, which is among the best for any government, of any size, in America. This 2 percent cushion also provides short-term cash-flow needs.

Add to these facts a $4.2 million budget gap for the Board of Education this year, a $3 million payment we will commit to keep Dimensions Healthcare and Prince George's Hospital afloat for additional months. In addition, there is unfunded pension liability due to poor stock performance and inadequate funding in prior years of the county's pension obligations. What's more, the soaring cost of insurance premiums, which you have all experienced, is further eroding this fund. When you tally these figures, the reserve may equal $126 million, but every dime is needed to cover legal and operational obligations.

Consequently, there is no surplus now and there was not one before I came into office.

Another significant challenge is to expand our services while there are limits on property tax increases. . . .

What this means for us is a greater challenge to be a first-class community, with first-class services. To be a first-class community we have to further reduce crime and improve education. While crime has recently dropped by 30 percent, we still must work with vigor so that no resident is ever afraid in their community. . . .

The infrastructure of our education system must be improved. Right now, we have 91 schools which are in need of repair. It is unacceptable for a child to go to school in a temporary trailer, or have sections of schools closed during inclement weather due to a leaking roof.

We need more police officers on the street and we need to hire more firefighters. . . .

But our needs outpace our revenues. After we meet our state-mandated obligations to fund schools, libraries and the community college, we will have fewer dollars to spend this year than we spent last year, and certainly less than what is needed to build the strong communities we all envision for our county. . . .

Because our tax base is limited, we have gaps in our revenue streams. This prevents us from properly funding some of the core programs and hampers our ability to be the community we envision.

We must have better environmental services. Many of our older neighborhoods have streets and sidewalks that have not been repaired for more than 30 years. We need road repair, better code enforcement and cleaner streets. But in order for us to make these improvements, we need to generate additional revenue.

We must come to the reality that we cannot depend on the state to carry us. We must pay our own way for those things we seek to improve our quality of life. And our citizens must understand that a small investment in ourselves will generate benefits beyond their imagination. . . .