N.H. Race Turns on Income Tax

CONCORD, N.H. – In the race for New Hampshire governor, Democrat Mark Fernald is doing what some analysts say borders on political suicide.

Fernald is betting he can overcome New Hampshire's deeply ingrained opposition to an income tax. He is not only refusing to take New Hampshire's traditional "pledge'' to veto an income tax, but he's also making the tax the centerpiece of his campaign.

In 30 years, only one person has refused to take the pledge and won. Democratic Gov. Jeanne Shaheen did so two years ago in seeking her third term, but, unlike Fernald, Shaheen did not embrace the tax.

Shaheen is running against Republican Rep. John E. Sununu in a close Senate race that could help determine the balance of power in Washington. Sununu beat Republican incumbent Bob Smith in the primary.

Fernald is running against millionaire Republican Craig Benson — one of 36 gubernatorial races up for grabs this year. Benson had a commanding lead in a poll released Oct. 24, with 52 percent of the vote compared with Fernald's 33 percent. Fifteen percent was undecided.

Benson, who has taken the pledge, promises to cap state school aid and limit state spending growth. Fernald would earmark a 4 percent income tax to pay more for public education while reducing state property taxes.

To some, Shaheen's victory in 2000 signaled the death of the anti-tax pledge in gubernatorial elections — though Shaheen insisted voters chose her based on her leadership. The last two governors who renounced the pledge — Democrat Hugh Gallen in 1982 and Republican Walter Peterson in 1972 — lost.

New Hampshire is one of only two states — Alaska is the other — without a general income or sales tax.

Republican analyst Thomas Rath says Shaheen's last win does not mean voters have warmed to the tax.

"This is a litmus test for this office,'' he insists.

Shaheen had pledged twice previously to veto the tax, but insisted in her campaign for a third term she had to keep her options open to deal with a school funding crisis, Rath points out.

Fernald, by contrast, advocates an income tax at every campaign stop.

"Every single poll I've seen — private or public — has shown an income tax has a base of about 32 percent,'' Rath says.

John LeDonne, 44, an independent from Concord, plans to vote for Fernald, but sees the tax as a losing cause.

"I don't think the state is ready for it,'' he says.

Brian Barrington, 44, a Republican from Somersworth, wants to keep using the property tax for most school costs.

"I live in a modest house and have a modest income,'' said Barrington, who plans to vote for Benson. "The property tax allows you to chose your level of taxation based on your living style.''

Another hurdle for Fernald is Benson's enormous wealth.

Fernald, 43, a small-town lawyer from Sharon, has little money. Benson, 48, of Rye, co-founded the former Cabletron Systems Inc. and was worth an estimated $600 million last year.

Benson spent $9.6 million — all but $700,000 his own money — in a television ad slugfest among three wealthy, anti-tax candidates in the GOP primary.

Benson has been criticized for running such a free-spending campaign — one that could break per-vote spending records by the time it's finished.

"I think he's trying to buy the governorship,'' says Marjorie Hudson, 68, an income tax supporter and independent from Westmoreland.

By comparison, the general election campaign has been all but invisible. Benson has spent another $880,000 to Fernald's $168,000.

Fernald has run only one television ad in his entire campaign. The focus of the ad: the income tax.