COUNCIL FEARS CITY DEFICIT : ALATORRE WANTS CONTINGENCY PLAN.

Byline: Rick Orlov Daily News Staff Writer

Concerned that the money may never materialize, a Los Angeles City Council panel called on Mayor Richard Riordan on Thursday to develop a contingency plan in case his plan to transfer funds from the airport and harbor is blocked.

The mayor's proposed $4 billion 1996-97 budget calls for transferring $30 million from the Department of Airports and $33 million from the Harbor Department for the general fund.

But the airlines are fighting the airport fund transfer, and the state Attorney General's Office is contesting the harbor transfer. In both cases, the opponents say the revenue is intended for specific goals and cannot be spent for general-fund purposes like police protection and street sweeping.

``What are we going to do if we don't get that money?'' asked Councilman Richard Alatorre, chairman of the committee that is reviewing the $4 billion budget.

``I'm concerned the revenues are questionable and might rely on the outcome of litigation that might not be resolved this year, and we'll end up with another deficit,'' Alatorre said.

Budget director Chris O'Donnell expressed confidence that the city would prevail, saying the city is seeking reimbursement for services that it provides the harbor and airport departments.

But the committee said it wanted a detailed plan on what would be done if the money doesn't come through.

The opening session of the budget deliberations featured presentations from two local economists who supported Riordan's projection of about 3 percent growth in the city, but also a warning that the city needs to be more active in luring business.

Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County, said the city needs to look at improving its industrial property base and reaching out for more business.

``The market for industrial space is strong, but there is no room for expansion and new companies are looking for more modern space,'' Kyser said, urging the city to look at some federal programs that could help upgrade industrial facilities.

Also, he said, the city is underrepresented in some parts of the economy, such as the motion picture-television industry, tourism and high tech fields.

``In the motion picture and TV industry, Los Angeles is surprisingly underrepresented,'' Kyser said. ``Look at Burbank, where there is Disney and Warner Brothers. Universal City is in unincorporated areas. Sony is in Culver City. The only two major studios (inside Los Angeles boundaries) are 20th Century Fox and Paramount, and they have not been box office leaders.

``Disney is going crazy looking for office space, but it's in Burbank and Glendale,'' he added.

Kyser said the same is true for tourism, with most tourists going to Universal City, Disneyland or Magic Mountain - all outside city limits.

Private economist Adrian Sanchez said the city and state economies have begun to rebound, and last year saw the first increase in jobs in Los Angeles County since 1990, with 61,000 new positions.

``We are also seeing a return of the high-wage jobs,'' Sanchez said. ``But we still have a long way to go to make up all the jobs that were lost between 1990 and 1994.''

Sanchez said growth in the region and the state will outstrip the national economy, but that it still is considered moderate growth.