James Kallstrom, the former local FBI chief who led the investigation into the destruction of TWA Flight 800, was named by Gov. George Pataki on Wednesday to head a new state Office of Public Security.

The appointment is part of the state's effort to protect the public after the Sept. 11 terrorist attacks that brought down the World Trade Center.

``Jim Kallstrom is a leader who is widely respected throughout the law enforcement community for his extraordinary expertise, ability and judgment,'' the governor said. ``He is the ideal person to help us do our part here in New York state to face down the challenges that terrorism presents.''

Kallstrom, 58, retired from the FBI at the end of 1997 after a 28-year career. A former Marine Corps captain who served in Vietnam, Kallstrom worked on the 1993 World Trade Center terrorist bombing case and helped bring down mobster John Gotti.

As head of the FBI's TWA Flight 800 investigation in 1996, Kallstrom became a fixture on national television with his daily briefings on the disaster and possible links to terrorism. The crash was eventually blamed on mechanical problems with the plane.

Kallstrom left the FBI to become senior executive vice president with MBNA Inc., a Delaware-based international banking and credit card company. He later was hired by CBS News as a law enforcement consultant.

``With Jim Kallstrom's guidance we will ensure that New York has the most comprehensive and well-coordinated anti-terrorism plan in the nation,'' Pataki said.

Pataki is not a new found fan of Kallstrom, upon his retirement from the FBI Pataki said the following, "Jim, you've left a proud and indelible mark on the institution you are retiring from. There's little doubt that, when words of wisdom are being given to young people rising through the ranks of law enforcement, your name will be cited often. Time and again, you've made us proud to be New Yorkers."

Kallstrom's new position will be unpaid and he will act as New York State's liason to the new federal department of Homeland Security.

Pataki and Mayor Rudolph Giuliani are also tackling the dire economic fallout from the terrorist attacks, with Giuliani predicting a $1 billion revenue loss this budget year and the governor calling for $54 billion to revitalize the city.

The state's congressional delegation vowed to fight for the federal money Pataki requested Tuesday, but Sen. Charles Schumer acknowledged that securing the full amount would be a ``very heavy lift.''

``We will do everything humanly possible to get as much of this as we can,'' said Schumer, D-N.Y.

At the still-smoking scene of the destruction Wednesday morning, dogs were brought in at least twice, apparently to determine whether human remains had been uncovered. Work stopped briefly at those spots but quickly resumed.

At least one body was brought out Tuesday night, draped in a flag and saluted by a line of firefighters.

Giuliani ordered a 15 percent cut in spending by most city departments Tuesday, predicting the terrorist attacks will cost the city 100,000 jobs this fiscal year.

He and Pataki said New York is well-positioned to recover from damage inflicted when terrorists crashed two airliners into the World Trade Center, leaving lower Manhattan a graveyard for thousands.

``People who bet against New York have always lost,'' Pataki said at a news conference. ``We're going to come through this.''

The mayor spared only the police and fire departments and the school system from the double-digit budget cuts. Those departments face a 2.5 percent cutback. A citywide hiring freeze went into effect after the attacks, he said.

Giuliani said the $1 billion estimate included lost taxes from hotels, restaurants and retail sales, which lost up to 70 percent of their business in the weeks immediately after the attack. Christyne Lategano Nicholas, who heads the city's tourism agency, told the Daily News editorial board that the city lost at least $237 million in hotel, restaurant and Broadway revenue from out-of-towners.

White House spokeswoman Claire Buchan said President Bush was ``committed to helping New York recover from the attack.''

The number of people reported missing from the trade center attacks remained at 4,815 Tuesday. There have been 422 confirmed deaths, including 370 victims who have been identified.

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