WORKERS BEGIN ALARCON-KATZ BALLOT RECOUNT.

Byline: Rick Orlov Daily News Staff Writer

The fight for a San Fernando Valley state Senate seat between City Councilman Richard Alarcon and former Assemblyman Richard Katz shifted Monday to the county Registrar-Recorder's Office, where workers started a hand recount of some 90,000 ballots.

Final, official returns showed Alarcon with a 29-vote margin in the June 2 Democratic primary over Katz, who requested the recount.

``No election system is perfect,'' Registrar Conny McCormack said at a briefing of some two dozen attorneys and observers before the start of the recount. ``If there was, we would all be using the same system.''

The weeklong marathon of hand-counting the ballots is expected to cost Katz $40,000.

Late Monday, at the end of the first day of counting absentee ballots, McCormack said 6,158 ballots were counted, with challenges made to 57 of them, but did not result in any change in favor of Katz. In fact, she said, Alarcon picked up one vote and Republican Ollie McCaulley picked up two votes.

No running totals are being kept, McCormack said.

Representatives from the campaigns of Alarcon and Katz challenged a number of ballots during the day, either for having been partially voted or for markings on the ballots.

The race for the Democratic nomination in the heavily Democratic 20th state Senate District has become one of the most closely watched contests in the state, partly because of the escalating dispute over a mailing sent out in the final days of the campaign.

That mailing, bearing the name and signature of state Sen. Richard Polanco, D-Los Angeles, and paid for by a contribution from a political action committee controlled by Polanco, portrayed Katz as having been linked to a 1988 effort by Republicans to keep Latinos from voting in an Orange County election.

Katz led the legal fight against the Republican action, and has accused Alarcon of race baiting in the campaign.

Alarcon has since offered an apology, which Katz rejected as insincere.

While Katz's aides said they remained confident they could overcome the gap, McCormack did not offer much hope.

``I have never seen a recount that would overcome this margin,'' McCormack said.

The routine of the recount quickly settled in, with four recount boards consisting of four members each.

They include one person reviewing the ballot physically, front and back, for what is known as a hanging chad - a spot on a perforated ballot that has not come off cleanly. Each board also has two people to tally the vote and a fourth to keep track of the ballots.

Each campaign has assigned two people to each recount board, with one person who reviews the ballot and who may issue challenges and a second to keep a a separate tally.

In the early morning briefing Monday, McCormack spelled out the ground rules for the recount and resolved various questions raised by the two campaigns.

For instance, she pointed out that the secretary of state's office has issued its own regulations, such as in the question of hanging chads.

``To be counted, a chad has to be perforated on three sides,'' McCormack said. ``Two doesn't do it. Only three.''