It was reported incorrectly yesterday that the Food and Allied Service Trades Council, which is launching a drive to overturn a new D.C. unemployment compensation law, had raised $65,000. These funds are dues paid by member unions, and it may be decided to use only part of that amount for the drive.

A group of local unions representing 42,000 Washington workers is launching a drive to overturn recently enacted reductions in District of Columbia unemployment benefits.

The Food and Allied Trades Council, which represents hotel and food-service industry workers, already has raised $65,000 and will begin circulating petitions next month to place on the ballot a measure providing more generous unemployment compensation payments.

"It's time the City Council started worrying about the people of the city, and not just the business interests," said Ron Richardson, secretary-treasurer of Local 25 of the Hotel and Restaurant Employees Union and a key organizer of the drive.

The new law, which was approved by the City Council and went into effect March 17, reduced the maximum number of weeks that unemployed workers can collect city unemployment benefits from 34 to 26 weeks and cut out benefits for persons who are fired from their jobs for cause. The law also sharply increased the unemployment taxes on local businesses.

Mayor Marion Barry and officials of the Greater Washington Board of Trade sought the legislation to eliminate a nearly $60 million deficit in the city's unemployment compensation fund and to relieve the overall tax burden on local businesses, which have complained that Washington's unemployment benefits are among the highest in the nation.

Richardson has been at odds with the leadership of the Metropolitan Washington Council (AFL-CIO)--of which the Food and Allied Trades Council is a member organization. He criticized Metropolitan Washington Council President Joslyn N. Williams and his executive committee for going along with the new law.

Richardson said the petition drive, which will also include church leaders, will attempt to gather at least 14,000 signatures to place substitute legislation on the ballot this fall that would restore the recent cuts as well as other benefits that were eliminated a year ago, bringing the number of weeks of eligibility for payments back up to 34.

"If the citizens of the District of Columbia get a chance to look at our proposal and vote on it . . . we don't think workers in this city will vote for the interest of the Board of Trade," Richardson said.

Council member Charlene Drew Jarvis (D-Ward 4), chairman of the housing and economic development committee that helped draft the new legislation, said yesterday that Richardson's group was "irresponsible" to mount an initiative drive.

"The difficulty with an initiative on an issue as complex as unemployment compensation is that there's no chance for a full discussion of the issue," Jarvis said.

The new legislation, which expires in 1985, provides for the appointment of a tripartite panel representing government, labor and business to review the act and consider alternate ways of dealing with the growing deficit in the unemployment insurance fund. "To circumvent that process at this point is irresponsible," Jarvis said.

Council Chairman David A. Clarke said he didn't object to the drive provided the labor organizers come up with a new plan that will leave the unemployment fund solvent.

"I don't think they can," he added.

Williams was out of town yesterday and couldn't be reached for comment. However, a spokesman said that Williams and other executive board members reluctantly backed the legislation, after obtaining as many concessions as possible.

"Josh Williams didn't like it. Nobody did," the spokesman said. "There was a lot of disagreement over it--a lot of tugs and pulls before finally coming to an agreement."

Bernard Demczuk, a lobbyist and organizer for the American Federation of Government Employees (AFGE), said that City Council support for reductions in the benefits was so overwhelming that labor officials had no choice but to go along with the compromise measure.

"We had to compromise," Demczuk. "Otherwise we would have lost the whole thing."

Demczuk added that while the petition drive might generate grass-roots support for improving the benefits, "You must get down to the problem of insolvency, and the initiative does not deal with insolvency."