Evans\Novak BS KY Analysis

Governor 2007 Kentucky: Republicans here feel strongly that Gov. Ernie Fletcher (R) has gotten a raw deal with respect to the scandal over hires he made outside the state's civil service system. However, they are equally convinced that he will not be re-inaugurated next January. The only question, therefore, is whether he loses the May 22 primary or the November 4 election.

Fletcher has alienated two key groups in Kentucky 's Republican Party -- first the grassroots organizers who got him elected in his close 2003 race, and second his Republican allies in the state legislature. To the former, he gave early impressions of ingratitude and neglect, and many of them have abandoned him by now. The latter complain that he has behaved in an aloof manner, not unlike the way President Bush dealt with the congressional majority when he still had it.

The business community has also been upset with much of Fletcher's work. Fletcher pushed through a so-called "tax modernization plan" that included one of the most hated of all taxes for small businessmen -- an alternative minimum tax for businesses based on gross revenues. As a result, the state is raising excessive revenues on the backs of low-margin small businesses, even those with bad balance sheets.

Despite promises during his 2003 election campaign to make Kentucky more business friendly, the state has dropped from the 29th to 36th most business-friendly state in the United States since 2004, according to the National Federation of Independent Businesses. The tax change played a significant role in that.

Former Rep. Anne Northup (R) is already nearly even with Fletcher in the polls, and she must be favored to win the primary. Despite what some view as a sluggish fundraising operation early on, she has hit her stride for the most part. The winner of this Republican primary must take 40 percent to avoid a primary runoff. A third candidate, businessman Bill Harper (R) -- who served as Fletcher's finance chairman in his 2003 election -- will sop up a significant portion of the vote in his native Western Kentucky , the most Republican part of the state. This could make it difficult to get 40 percent.

Still, Fletcher's support lags even at a time when he is on television and Northup is not. The real state of play in the GOP primary should become clearer when Northup takes to the airwaves in April. Leaning Northup.