Although state Democratic Party Chairman Randy Horiuchi has given up working with tax limitation advocates to remove sales tax from food, he said the party still may get behind other initiatives.

The so-called "unholy alliance" between Democrats, labor and the group behind last year's failed tax-limitation initiatives has been assailed from both sides of the political spectrum.Complaints from conservatives in the tax-limitation movement as well as Democrats have caused a chain reaction of events that has splintered the alliance.

The Utah State AFL-CIO already has backed off its support for the Tax Limitation Coalition's latest initiative drive. Union leaders will meet later this month to make a final decision on whether to endorse it.

Dropping out of the drive to take the sales tax off food brings Horiuchi back in line with Democratic leaders who have been critical of his joining forces with the group behind last year's failed tax initiatives.

However, his concession to the wishes of the likes of former Gov. Scott M. Matheson does not necessarily mean Horiuchi is running for a third term as the head of the Democratic party.

At the same press conference Wednesday where he spelled out his decision to break off ties with the Tax Limitation Coalition, Horiuchi shrugged off questions about his own political plans.

He said, as he has in the past, that there are several candidates for the chairmanship that he would be willing to step down for. Neither of the two announced candidates - former Jesse Jackson delegate Marvin Davis and Salt Lake attorney Peter Billings - fit that bill.

Davis is not considered a serious contender by party insiders. Billings has been endorsed by Matheson and Rep. Wayne Owens, D-Utah.

Billings has already slammed Horiuchi for associating the party with the coalition and its spokesman, Merrill Cook. Last election, Democrats battled both Cook's campaign for governor as an independent and the tax initiatives.

Horiuchi acknowledged Wednesday that his position could put added pressure on any candidate he supported. He also said it would be unfair to saddle the next chairman with what has proven to be an unpopular position.

But he did stress that the initiative process still could be useful in combating the Republican controlled Legislature, which has refused to consider a number of traditional Democratic issues.

Going the initiative route, Horiuchi said, "could bring Democrats back to greatness in Utah as the party of the people. Democrats will offer Utahns a chance to be heard far and wide on these people issues."

Among the potential initiatives that Horiuchi said are still supported by the party are raising the state's minimum wage, capping interest rates on credit cards and boosting income tax relief for the poor.

Of those issues, only hiking the minimum wage has support elsewhere. The Utah State AFL-CIO has expressed interest in circulating that initiative petition, with or without the Democratic Party.

The Tax Limitation Coalition, meanwhile, is going ahead with plans to launch an initiative drive to take the sales tax off food. A rally is scheduled for Saturday in Ogden on the steps of the Municipal Building.

Coalition leaders, standing under a banner that proclaims "Let them eat tax-free," will try to revive some of the enthusiasm behind the three tax-cutting initiatives that were defeated in November.

To qualify for a position on the next general election ballot, in November 1990, the initiative petitions will have to be signed by nearly 65,000 Utahns before June 8, 1990.