Small-town mayor on battle lines of Salvadorean politics.

Mayor Jose Neftali Hernandez sits calmly in his office on the second floor of the town hall. Ten months ago he was blindfolded, his hands tied behind his back , in the local National Police headquarters.

Ninety days after his abduction the mayor, who at the time had not assumed office and was working for the Christian Democratic Party, was released. No formal charges were ever brought against the mayor. The decision to release him, he says, was as unexpected and sudden as his capture.

Mr. Hernandez contends he was detained over personal differences between himself and friends of the local military commander. He understands, as well as anyone here, that the military can be capricious.

The mayor, who assumed office two months ago, is a member of President Jose Napoleon Duarte's political party. While the new President represents a return to civilian rule in El Salvador, local officials like Mr. Hernandez daily confront the traditional authority of the military, which is pervasive in garrison towns like San Francisco Gotera.

One year ago the commander of the local garrison, Col. Jorge Adalberto Cruz, who was replaced in June, prohibited the sale of alcohol in the province. Soldiers had been drinking on duty, according to local officials. A short time later Colonel Cruz banned the sale of a tranquilizer that is apparently popular among troops.

''The colonel's decision to ban the sale of alcohol in the town cut our tax revenues by $2,000 a month,'' Hernandez says.

''It didn't stop the arrival of alcohol. It just created a clandestine network to bring it in, and ended our most important source of revenue. We often cannot pay our town employees. We have tried to argue with the new commander that the military's prohibition has had no effect, but he says the prohibition is a good idea.''

While Hernadez speaks, North American disco music blares from a large tape machine around which several soldiers have gathered. Near them are stacks of green army knapsacks and black M-16 automatic rifles.

The Army has also requisitioned the cinema and swimming pool. The actions have made residents angry.

What makes them angriest, however, is the Army's virtual annexation of the town's central plaza. This is the spot where families gather to socialize. But it is to become an extension of the military garrison.

Military officials also have said they would like to tear down the town's Roman Catholic Church, which borders the addition of the barracks. The vacant zone so created will minimize any threat of attack on the barracks.

The military tends to reach into all sections of the town. ''If one sector of the town wants to have a party, it needs permission from the colonel,'' Hernandez says.

''The colonel serves on all the town committees, and everyone knows that what the military decides is law.''

Nevertheless, Christian Democratic officials here are trying to break the influence of the military-supported ARENA political party. The chief method of doing this so far is the dismantling of some ARENA programs in camps for displaced persons.

Much of ARENA's civilian infrastructure is in the displaced persons population, which lives in tottering cardboard shacks around the town. Officials says there are some 15,000 displaced in San Francisco Gotera and about 50,000 in Morazan Province as a whole.

''The ARENA officials pressured the displaced people to vote for them,'' says the new Christian Democratic governor of Morazan, Rosa Emelina Hernandez, ''and they use all of the government programs to get votes.''

The governor and mayor contend that the US Agency for International Development's (AID) road construction projects, which are designed to give employment for the displaced, continue to be manipulated by ARENA.

''The people who get the jobs on the road are not displaced people,'' she says, ''they are ARENA supporters who live in the town.''

Displaced people also complain about hiring practices of local AID offices. AID officials here refused to be interviewed. But a senior AID official in San Salvador disputes the charges: ''We sent an AID official to investigate this report on July 25,'' this official says, ''and we found no substance to the charges.''

The Christian Democrats apparently are not above using pressure tactics either. The governor's critics, including some displaced people, contend that she has replaced the elected governing board in some displaced persons centers with Christian Democratic supporters.

Battle lines between Christian Democrats and ARENA are drawn around control of specific programs. But the real power, most people say, is in the garrison.