As a new term of office begins in Montgomery County, the executive and council face five major challenges. To meet them will require heavy doses of both discipline and creativity.

The first and most pressing challenge is to cope with the ever-tightening fiscal constraints on county government. Because of major improvements in management over the past four years and the continued strengthening of its economic base, Montgomery County is in better financial condition than most local governments. But we are not immune from the combination of forces that is pushing many governments to the brink: sustained national recession, rising unemployment, expenditure obligations that are outpacing revenue growth, diminishing federal (and state) grants, and growing responsibilities resulting from federal program cuts.

We have not increased the property tax rate in four years and have kept budget growth below inflation. That kind of fiscal control must continue.

The second challenge is to maintain and improve public services, even under stringent financial conditions. The anti-government rhetoric of recent years has made this task all the more difficult, by implying that government is not only inefficient but even superfluous. Slowly, however, a public consensus is forming in recognition of the importance of local government services. It is now fashionable to lament the decline of "public infrastructure," the roads, bridges, water lines and sewers that have traditionally been local government responsibilities. Alarm also is being expressed over the inability of American public education systems to produce graduates equal to those from school systems of other nations that are our economic and political competitors.

Perhaps the time is right to establish a more balanced and mature public understanding of the importance of government services, not only as they affect the quality of life locally, but the health of the economy nationally.

The third challenge is to adjust our notions of the appropriate roles of public and private institutions. The conventional distinction between "public" and "private" can often be more an impediment than a help in determining who can best do what. There are some "public" functions that might be better handled by the private sector; for example, all the refuse collection in Montgomery County is carried out through private contract. By the same token, some functions traditionally considered "private" may be more efficiently handled by government; for example, Montgomery County's decision to "self-insure" through its own risk management program has cut its insurance costs nearly in half (and placed greater emphasis on avoiding accidents and illness).

In the past four years in Montgomery County, we have undertaken numerous "public-private partnerships," involving new relationships among government, business, nonprofit organizations, civic associations, self- help groups and individual citizens. Such efforts include merchants' cooperatives, joint economic development efforts, a quasi-public corporation for the performing arts, parent support groups working with the schools and county government to deal with teen-age problems, business assistance to the working poor and cooperative housing ventures. And yet we have only scratched the surface.

The test will be whether we can break out of old ideological molds and objectively ask the question: what is the best way to pursue our commonly shared goals?

The fourth challenge is to find the appropriate scale of operations for various public functions. Bigger is not necessarily better, nor is smaller necessarily more beautiful. We need to examine each function to determine appropriate roles for neighborhood associations, municipalities, county government, metropolitan organizations, state and federal governments and even international institutions. County government has a special responsibility in this "sorting-out" process, in keeping with Ren,e Dubos' admonition to "think globally, but act locally." None of these levels of government is inherently more virtuous than the others. The question is which can do what best, and how can all work more cooperatively together.

The fifth challenge is to accommodate and productively channel the powerful urge for public participation in county government. Those who want to participate are legion and growing in number. Why? Because county government directly affects their lives--how they get to work, the education their children receive, the safety of their homes and streets, the quality of the water they drink and the air they breathe.

But it is more than that. There are more groups, greater diversity and more intense political competition to ensure that a particular point of view is heard and respected. Standards of fairness are higher than they used to be, and so people are more demanding. Many people long for the sense of community that comes from participating, both in the process and in the accomplishment. And to top it off, there is the huge post-war "baby boom" that was reared on a steady diet of democratic ideals, and not even the '60s and '70s made them all cynical. They have reached an age and point in life when they want to be involved in the local community.

To meet each of these challenges will require the application of some time-tested principles of good management, careful analysis and clean decision-making. But it also will require a willingness to break free of ideology and conventional mind-sets to deal with some quite new conditions. It is that blending of the conventional with the creative that will be the biggest challenge of all.