CALIFORNIA ELECTIONS / U.S. SENATE : Huffington Returns Feinstein’s Tax-Dodging Charge

Just 24 hours after Sen. Dianne Feinstein accused her leading Republican rival of dodging his taxes, GOP candidate Michael Huffington responded in kind Wednesday with a new television commercial raising questions about whether Feinstein has paid enough federal taxes.

Huffington’s ad says he has paid “every penny in tax that he owes,” rejecting a charge made in a Feinstein television ad released Tuesday that Huffington “avoided California taxes” by maintaining a residence in Texas until 1991.

The Republican commercial then escalated the exchange by saying that Feinstein is a millionaire “and yet in three separate years, (she) paid no federal income taxes.”

Huffington campaign manager Bob Schuman acknowledged he had no evidence that Feinstein owed taxes during those three years. He said the information was revealed when the Democrat released her income tax statements while she was a candidate in the 1990 governor’s race.

Still, Schuman said, “if Mrs. Feinstein wants to see a tax cheat, perhaps she should look in the mirror. All we are saying are the facts. This is the campaign that called Mike Huffington a tax cheat.”

Huffington, a freshman congressman from Santa Barbara, has declined to release his own income tax statements.

Feinstein campaign officials reacted angrily to the new commercial, saying that it was particularly “sleazy” because the reason she did not pay taxes in 1978 and 1979 was because of the death of her husband, Bertram Feinstein, from cancer. Officials said the illness forced the couple to pay expensive medical bills even as they lost income.

“It was a terrible, terrible, horrible, debilitating part of her life and it was a tough, tough economic time for them,” said Feinstein campaign adviser Bill Carrick. “He’s pretty sleazy. . . . Even during the (1990 Pete) Wilson and Feinstein war, nobody stooped this low.”

The third year that Feinstein did not pay federal income taxes, 1985, was due to a financial loss absorbed by her and her husband, Richard Blum, that exceeded that year’s income, her campaign said.

For many campaign observers, the heated exchange was the explosion of a political volcano that has been rumbling for weeks.

Most of Huffington’s commercials during the spring have targeted Feinstein’s record on taxes and crime. With the latest exchange, the two millionaire candidates are accusing each other of dodging taxes even though neither has proof of wrongdoing.

“What this proves is that the Senate race is going to be a slugfest,” said Darry Sragow, who managed Feinstein’s 1990 governor’s race and now works with gubernatorial candidate John Garamendi. “Six months ago, people were suggesting that Feinstein would be able to slide into a new term in the Senate. Now, indeed, Dianne is going to have to fight to win.”

Huffington led his nearest GOP rival in next Tuesday’s primary, William E. Dannemeyer, by 14 points in a Times poll last week. Dannemeyer also increased the volume of his campaign this week, mimicking Feinstein’s charge that Huffington is a Texas carpetbagger who avoided California taxes.

Feinstein’s charge stems from the fact that Huffington and his wife claimed separate residences from 1988 to 1991. Huffington said he lived in Houston while he worked at the family’s oil and gas company until its sale was finalized in 1991. He said he spent weekends in Santa Barbara, where his wife lived and where his two daughters were born.

Feinstein’s campaign contends that Huffington remained in Texas because that state has no income tax. California state tax officials said, however, that residency laws are hard to prove and that Huffington’s situation does not appear suspicious.

Feinstein’s campaign also acknowledged that it had no proof of wrongdoing, calling instead for the state Franchise Tax Board to investigate questions about the Republican’s proper residence.

Feinstein officials said the senator was unavailable for comment Wednesday.

Huffington also was unavailable, but his ad, which began airing Wednesday night, said the Democrat’s commercial was the act of a “desperate politician.” And his new commercial begins by attributing Feinstein’s attack to polls that show her support dropping.

Feinstein’s lead over Huffington in a hypothetical matchup in the Los Angeles Times Poll last week was 14 points, about half of what it was in a statewide Times survey in March.

Huffington has given his campaign at least $6.3 million from his personal fortune to help propel his standing from a little-known congressman to major Senate rival in just a few months.

Campaign observers from both parties say Feinstein’s attack is evidence that Huffington was beginning to threaten the incumbent senator.

“I think she’s got to worry about this race getting too close,” said Sal Russo, a Republican political consultant in Sacramento. “If Feinstein doesn’t respond, she’s crazy. . . . In contemporary politics, charges unanswered are charges believed.”

Russo added that senators traditionally have difficult reelections in California because the state is so big. He said Feinstein “has done about as well as you can do in getting attention. And yet look what’s happened to her.”