ELECTIONS / L.A. MAYOR : Katz Crashes Woo Affair; Mini-Debate Breaks Out : Campaign: The two candidates promote rival plans to bail the city out of its fiscal crisis.

With a theatrical burst of one-upmanship, two prominent candidates for mayor Wednesday sought to promote rival plans for bailing Los Angeles out of its worst fiscal crisis ever.

Up to now, most of the candidates have resolutely avoided any discussion of what they would do about the looming $500-million municipal deficit--an amount roughly equal to one-quarter of the city’s general fund.

The impromptu mini-debate staged Wednesday between City Councilman Michael Woo and Assemblyman Richard Katz on the subject of the city’s fiscal crisis barely touched on the challenge of how to run a city that is about to lose one-quarter of its general fund, some city officials said.

But in a campaign that is starved for excitement, even a brief outbreak of mano a mano can make up for any lack of substance. Such was the case when Katz walked in on Woo’s press conference and challenged Woo to get behind his proposal to sell the city-owned Ontario Airport as a way of raising millions of dollars to pay for more police.

Not about to be upstaged at his own press conference, Woo urged Katz to support his proposal to give city department heads more authority over their own budgets as a means of encouraging greater efficiency, innovation and savings.

But the exchange quickly degenerated into accusations of fiscal irresponsibility.

A sample:

Katz: Mike, if you had been in Sacramento last year more than the one trip you might have been able to make a difference in the fight to keep cops and firefighters on the street.

Woo: Will you . . . assure us that you will not do what you did last year in terms of your efforts to fight for Willie Brown’s budget plan that would have taken $300 million away from the city of Los Angeles?

When the sniping died down, there were several ideas left on the table, few of them new and fewer still seen as the strong medicine needed to treat City Hall’s ailing financial condition.

Woo’s ideas were billed as “proposals designed to address the growing city budget emergency,” but even his staff conceded that few of the councilman’s recommendations would save money in the short term.

And the one idea of Woo’s that would immediately bolster the city treasury is already the subject of proposed legislation. Assemblyman Terry Friedman has drafted a bill that would net an estimated $40 million annually by allowing the city to tax banks and savings and loans, currently exempt from the city’s business levy.

Woo also called for an amendment to the state Constitution that would prevent the state from balancing its budget with revenue diverted from Los Angeles and other cities.

The drawback to the proposal, which is not new, is that such a measure could not be placed on the ballot before 1994 when the next statewide elections are held, said Keith Comrie, the city’s chief administrative officer.

Meanwhile, said Comrie, Los Angeles officials have joined an effort to offer the state options to taking local revenue.

Katz’s proposal to sell the Ontario Airport, a 1,468-acre facility 35 miles east of downtown, had an equally chilly reception at City Hall--although Ontario officials like the idea.

Selling the airport could mean a $350-million windfall for the city that could be used to pay for 500,000 additional hours of police work each year, Katz said.

James Fatland, the mayor of Ontario, said his city is interested in acquiring the airport so it would control a facility that is critical to the city’s economic destiny. “There’s no doubt that the airport is the economic driver out here,” Fatland said.

Fatland would not discuss price however, while noting that Ontario is in good financial shape and has a low bond indebtedness.

The sale could provide a quick fix but is likely to run into widespread opposition from those who believe it is foolhardy for the city to sell off assets that will only grow in value.

“Our problem is that we are spending more than we are taking in. The answer is not to sell off the family jewels,” said Councilman Zev Yaroslavsky, who chairs the council’s Budget and Finance Committee.

Yaroslavsky and a group of council members plan to propose today a series of harsh measures to balance the budget. According to his office, the proposals include structural changes in city departments, reform of the Community Redevelopment Agency and possible layoffs of city employees.

Yaroslavsky recently described the gravity of the fiscal crisis during an interview in which he also criticized the mayoral candidates for failing to level with voters about the city’s financial problems.

“If we close the libraries, the Recreation and Parks Department, the Planning Department, the Transportation Department and Building and Safety, we would not make up (the shortfall),” Yaroslavsky said in an interview with the Planning Report, a local newsletter.

Yaroslavsky went on to say that the candidates for mayor should be pressed to say what they would do about the budget shortfall.

In that sentiment, he is not alone.

“I don’t think the subject has been adequately addressed,” said Jane Pisano, dean of USC’s School of Public Administration. “The candidates are saying all the hopeful things they would do to make the city a better place to live, but very little about how they would pay for their visions, let alone how they will go about the business of governing in a recession.”