In an atmosphere so politically loaded that Chief Justice Rose Bird opened by declaring. "All the threats in the world will not deter us from the important task before us," the California Supreme Court yesterday heard school, county, and city attorneys argue that Proposition 13 should be overturned as a violation of the state constitution.

The justices of the court have "been threatened with recall, with defeat at the polls, and even with an anonymous threat of physical harm to them and their families if they fail to vote in a particular way" said Bird, one of four Supreme Court justices who face confirmation this November by the same voters who approved the tax limitation issue by a 2-to-1 ratio in June.

The four justices had been asked to remove themselves from this issue because of their pending confirmation, but Bird said they would not do so - that in all controversies "we have been guided by one principle: upholding the rule of law."

With that stern beginning - and with state Attorney General Evelle Younger, the Republican gubernatorial candidate, joining in the Proposition 13 defense - the court and a packed room of spectators listened to arguments that proposition 13 is too broad to meet the requirements of the law, denies equal protection to some propery owners, and illegally endangers municipal pension plans and bond obligations.

William Norris, arguing on behalf of a California high school district, said the initiative "reverses the principal of home rule in this state" by setting the new 1 percent property tax at the state level and sharply limiting the taxing authority of local governments. The amendment constitutes a governmental change too sweeping to be approved through the initiative process, Norris argued. "It goes so much further than property tax relief," he said.

In addition, argued Richard J. Moore, country counsel for the Bay Area county of Alameda, Proposition 13 arbitrarily discriminates against those whose property has changed hands since 1975. Because the amendment rolls back assessments to the 1975-76 level only for those whose property has not changed hands since then, Moore said, next-door neighhors could be paying significantly different tax rates "without any rational basis."

Burk E. Delventhal, deputy San Francisco city attorney, told the court that the financial uncertainty brought on by Proposition 13 was placing such a strain on San Francisco that "we are not going to have enough money to fund our firehouses and our police stations and at the same time make good on our contractual obligations" - that the law, in effect, was forcing the city to renege either on its pension plans or its bond obligations.

"Has anything like that happened yet?" asked Justice Matthew Tobriner. "Has any pension holder not received his pension? Has any bond holder not received interest?" No, Delventhal said, they had not, but "it would be highly imprudent for the city to wait for an impasse."

The constitutional objections were rebutted by John J. Klee, assistant state attorney general, who said the amendment was neither discriminatory nor too broad and vague to be implemented," Proposition 13 is really no mystery," he said, and he referred to Norris" argument, which had suggested that the court overturn Proposition 13 but wait until next year to do so, since this year's budgets have already undergone revisions of unprecedented complexity to comply with the law. "It seems to me," said Klee, "that's an impled concession, if not an expressed concession, that it can work."

He was followed by Younger, whose brief statement firmly endorsed Proposition 13 and the initiative process rather than specifically addressing any of the legal challenges.

"Having lost at the ballot box," Younger said, "opponents of Proposition 13 have now come before this court seeking to accomplish through judicial decision what they failed to do through the democratic process . . . this tremendous smoke screen of rhetoric is an attempt to conceal the simple fact that petitioners don't like the way the people voted on Proposition 13."