There is an old joke in Montgomery County: Just as every New Yorker has a story about being mugged in Central Park, everyone here can tell a taxi horror story. The elderly woman left to wait in the rain at the Safeway. The child with cerebral palsy waiting for nearly two hours to go home from the hospital. The couple whose vacation plans were sunk when their taxi never showed and they missed their flight.

Tonight at 7:30 anyone with anything to say about taxi service in Montgomery County and on changes proposed by County Executive Douglas M. Duncan (D) will take to the microphone in a public hearing before the County Council at the Council Office Building in Rockville.

The issue is controversial. On one side are those pushing for change, led primarily by Action in Montgomery, a citizen action group that, in a series of meetings throughout the county, found that poor taxi service was a chief complaint, particularly among the elderly or disabled.

"We want to make sure service is improved so folks who rely on this service have a ride," said Mark Fraley, who heads Action in Montgomery. "Our sense of how you do that is to create competition, put some kind of market out there."

Arguing on the other side of the issue are industry representatives. They concede that improvements may be warranted but say that Duncan's proposed legislation isn't the way to make changes.

"I understand people want better service, but this bill won't give them better service," said Lee Barnes, owner of Barwood Taxi. "They'll be very disappointed."

Barnes and the company his father founded 40 years ago have become the touchstone of the taxi debate.

Of the 580 taxi licenses in Montgomery County, 433 use Barwood's name and dispatch system, and 360 are owned by the company. Critics contend that the virtual monopoly is responsible for the complaints and horror stories about service.

Duncan, in unveiling his proposal in January, said it "sets performance standards for taxi service and increases competition -- and the clear winners will be Montgomery County consumers."

Duncan proposes to nearly double the number of taxi licenses the county issues to 900, or about one per 1,000 residents. And no longer will license owners be allowed to transfer them or sell them to others. Fleet licenses will revert to the county. Licensed individuals who drive "owner-operated" cars will be allowed to transfer them after a limited time.

If companies can't resell licenses and recoup their investment, Barnes says, what's the point of operating a good business? "Taking away the value of the assets of the business . . . won't improve customer service. Why invest? Why not just let your business run into the ground?"

Among taxi drivers, Barnes has detractors as well. Those who pay $100 a day to rent a Barwood cab spend much of the day driving to pay for rent and gas before they begin to see a profit. Some, hanging out at the Silver Spring Metro cabstand on a sweltering June day, called the job "indentured servitude."

But drivers who both rent and own their cars find themselves aligned with Barnes on one key issue: Neither group wants to see the market "flooded," as Barnes put it, with more taxi licenses.

Proponents of the increase say that is the only way for the county to attract a major competitor to Barwood and improve taxi service. But Barnes and the drivers say it will only decrease driver earnings and won't make taxis get to their pickups any faster.

"When the county added 100 more taxis in 1988, driver earnings went down almost 30 percent," Barnes said.

The problem, Barnes said, is with so much pressure to make the rent, taxi drivers are often unwilling to pick up the short fares, such as the elderly woman's $6 ride from the Safeway to her apartment or the $3 trip to the pharmacy. They wait at hotels, hoping for the big bucks of an airport ride, and ignore or sometimes reject the shorter calls.

"Drivers will only go where they can make money," Barnes said. "If you're in the wrong place at the wrong time, you won't get a taxi to pick you up even if there are a million taxis."

Girma Mengistu, a founding member of a new group of owner-operated cab drivers, Cabdrivers Allied for Better Service, blamed that phenomenon on high rents and an inefficient Barwood dispatching system that fails to "link" short rides to give drivers more incentive to take them. Further, increasing the number of licenses available will devalue what to many was a $40,000 to $80,000 investment, much of it pieced together from loans from relatives and friends.

"This is my 401K. This is my retirement," Mengistu said. With a greater supply of licenses and new buyers unable to sell in the future, he will lose nearly everything.

Barnes said he gets several compliments for every complaint he hears. But in a 77-page report released a few years ago, an independent consultant found that Barwood taxis, in particular, were chronically late and often failed to show up.

Penny Reeder, who until December sat on the county's Taxi Service Advisory Commission, knows intimately what that feels like. She once waited two hours for a cab to take her to an awards ceremony where she was to be a presenter. She was assured several times, she said, that the cab was on its way when she called the dispatcher. It never arrived. She missed the ceremony. She has been stuck with her small children waiting for a cab at the grocery store. As a blind person, she has been refused rides by drivers who didn't want her dog in their taxis.

She doesn't know what the solution should be or whether Duncan's reforms are the right ones. But something has to change.

"All I know is, when I need a cab, I don't want to wait in the cold or the heat for hours for one."