Tough New Jersey Election Turns on Tax Increases

THREE years ago a Republican political unknown named Christine Todd Whitman came within 2 percentage points of one of the biggest political upsets in New Jersey history.

After a number of prominent Republicans declined to run, Ms. Whitman took on supposedly unbeatable United States Senator Bill Bradley and fell short of victory by just 59,000 votes. Citizens angered by a $2.8 billion tax increase instituted by Democratic Gov. James Florio vented their displeasure at fellow Democrat Bradley.

Now Ms. Whitman is getting a direct shot at Mr. Florio in a gubernatorial race that has focused the national political spotlight on New Jersey. The race is being closely watched because in this year following the presidential election, New Jersey is one of only two states (Virginia is the other) to hold gubernatorial elections.

Florio has closely aligned himself with President Clinton, who has expressed strong support for the Democratic leader. The governor said he made the tough choice of raising the state taxes to tackle New Jersey's economic problems, just as President Clinton is making tough economic choices to get America back on track.

It is a strategy whose selling power may depend on the strength of the national economy come November, says Steven Salmore, a GOP strategist and professor at Rutgers University.

"If the economy is doing well, then Mr. Clinton's support will rise and that might energize Democratic voters to vote for Florio," Mr. Salmore says. High unemployment rate

Salmore says New Jersey's current unemployment rate of 7.4 percent, the highest among Northeast industrial states, is not a good omen for Florio.Polls have his approval rating hovering between 30 and 40 percent.

There is also concern over the impact of federal investigations into state municipal bond dealings that caused Florio's chief of staff to resign recently.

Still, Republicans are not counting Florio out. Though he rammed his tax package through the legislature with little discussion, he has spent much of the last two years doing fence mending by meeting with voters. Florio also has hired James Carville, the political consultant credited with engineering Clinton's presidential victory, as his political adviser. "It's going to a close race, but we can win it," Mr. Carville says.

Carville said that Florio's campaign strategy will portray Whitman as a wealthy aristocrat incapable of understanding the struggles of the middle class.

Florio dropped out of high school at the age of 17 to join the Navy, but later earned a law degree and built his own political machine as a state senator and US House member.

While conceding that the tax increase issue has hurt Florio, Carville says he will try to focus the campaign on Florio initiatives such as the first assault-weapons ban in the nation and welfare reform.

But that may not be easy. Florio won the 1989 gubernatorial race by promising New Jerseyians that he would not raise taxes. But he did precisely that upon entering office. Grass-roots revolt

Florio quickly found himself the target of a grass-roots revolt. Eight thousand citizens gathered at the state capital to demonstrate against his tax program and "Dump Florio" bumper sticks abounded.

Enter Whitman. While she is a member of a politically connected New Jersey family, she was largely unknown when she decided to challenge Bradley.

Her political career consisted of five years on the Somerset County Board of Freeholders in Central New Jersey and two years as president of the New Jersey Board of Public Utilities.

But by virtue of a close loss, Whitman immediately became the front-runner for the GOP gubernatorial nomination.

Though the primary was rife with attacks, all three contenders joined Wednesday at an unity luncheon. "No one should miss the significance of this unity luncheon," Whitman said. "We're going to do this together, all of us."

Whitman then launched an attack on Florio. "I expect to win on the simple strength of better ideas," she said. "But most of all I expect to win by exposing Jim Florio's disastrous performance and lack of leadership in New Jersey."

Florio, who was unopposed in the Democratic primary, didn't even wait for Whitman to claim victory before announcing he was ready for the fight.

"All of us have taken some lumps in the last couple of years," he told cheering supporters. "But ladies and gentleman, it is now our turn at bat. I an eager for the chance and ready for the fight." It is expected to be quite a fight.

Whitman's camp agrees. "It will be a close race, a very hard-fought race, and - I hate to say it - a very dirty race," said Roger Stone, a GOP strategist who is serving as Whitman's adviser.

Political insiders say Florio's best chance of winning is to go on the offense and attack and discredit Whitman. Her advisers admit their candidate has been vague on the issues and must quickly develop detailed positions.

Whitman's campaign manager David Murray said Whitman will not tolerate attacks form the Florio camp. "When attacked, Christine Whitman will respond in kind," he said. "You can take that to the bank."