The Episcopal Church is going forward with plans to hold its 1991 General Convention in Phoenix despite defeat of an election day referendum that would have made Martin Luther King's birthday a state holiday in Arizona.

Presiding Bishop Edmond Browning, who made a special trip to Phoenix in the spring to lobby on behalf of the holiday, said he was disappointed by the measure's defeat. However, he said a meeting in Phoenix could serve as an occasion for Episcopalians to take a stand against racism.

"While we cannot ignore or condone the results of the referendum, I believe that by working with people of good faith who are in Arizona, we can come and together make a vigorous witness for the dignity of all God's people -- and against the evils of racism," Browning said.

Judith Conly, president of the Union of Black Episcopalians, an unofficial church group dedicated to combating racism, said this week that the organization was not pleased with the decision to keep the meeting in Phoenix. But she said the union will follow its normal procedure of having a booth at the convention and will work with church officials to ensure that the state reconsiders making the slain civil rights leader's birthday a holiday.

In deciding to hold the convention in Phoenix, the 2.4-million-member denomination is adopting a different approach from some other organizations that favor the holiday. Arizona has lost at least five conventions over the King holiday issue, and the National Football League's Super Bowl -- one of the country's biggest money-making events -- may cancel its scheduled 1993 date in Phoenix.

Arizona Episcopalians who are advocates of the holiday, such as Bishop Joseph T. Heistand, say they are hopeful that the measure will be considered again and achieve passage.

Heistand said, "I don't believe the majority of citizens of Arizona are racist. I believe they stand for justice and civil rights for all people. And it is my hope they can, working with the legislature of Arizona, pass a Martin Luther King-Civil Rights holiday."

The Arizona legislature passed a King holiday bill in May, but opponents of the holiday gathered enough signatures to put the holiday question before voters in a referendum. The voters then rejected the holiday.