New York Mayoral Contest Plays Out as a Bitter War of Words : Crime and race are key issues as Dinkins, Giuliani camps trade charges. Outcome could have state, national implications.

He stood on the street beneath a second-floor dental and medical clinic in Spanish Harlem with a large windblown blue-and-white banner proclaiming “El Pueblo Con Giuliani” as supporters of Mayor David N. Dinkins started heckling.

“This is going to be a very close election and the Latino vote is crucial to it,” Rudolph W. Giuliani, the former federal prosecutor who once again is running for mayor, told a small but attentive crowd. “What you see are the dying gasps of an Administration. The mayor is acting desperate. His supporters are acting desperate.”

“Go home Giuliani. Don’t tell no more lies to these people,” shouted a man holding a Dinkins sign. “Take him to Queens,” jeered a companion standing near the candidate’s banner, which translated read: “The Town is With Giuliani.”

Giuliani, who is both the Republican and Liberal Party candidate for mayor, received the endorsement of the former director of the mayor’s Office of Latino Affairs at the rally. But the sharpness of crowd reaction mirrored the nastiness of the close contest pitting him once again against Dinkins, who is fighting to avoid becoming the first big-city black mayor to lose his first bid for reelection.

It is a bitter, racially tinged election with ramifications not only for Democratic Gov. Mario M. Cuomo, who is expected to seek a fourth term next year, but also for the Clinton Administration. President Clinton, First Lady Hillary Rodham Clinton and a parade of Cabinet officers have appeared in the city on Dinkins’ behalf.

Added to Republican Richard Riordan’s election as mayor of Los Angeles, a Giuliani victory on Nov. 2 could further tarnish the Democratic image as a champion of urban America--supporting Republican claims of inroads with big-city voters. Giuliani is an ally of Jack Kemp, the former secretary of Housing and Urban Development, who is a potential contender for the GOP presidential nomination in 1996.

Four years ago, Dinkins defeated Giuliani by 2 percentage points in a city where registered Democratic voters outnumber Republicans by better than 4 to 1. It was the smallest winning margin in the city’s history. Running as a leader who could bind racial wounds, Dinkins built a coalition of Jewish and Latino voters atop a solid base of black support.

Some surveys show Dinkins, 66, holding a slim lead, but many veteran political strategists believe the race is a tossup.

A majority of voters tell pollsters that they are worse off than four years ago and that they are pessimistic about the local economy, race relations and the city’s future. Crime is a key issue, with many New Yorkers saying they are tired of walking warily to video rental stores at night or facing aggressive street beggars or unending scenes of homelessness in their neighborhoods.

In this environment, Giuliani, 49, stresses his background as a former U.S. attorney in New York and pledges that he would be a “hands-on mayor” who would “get control” of the city.

Dinkins tells audiences that during his four years in office, he has added more police to the force, which will soon total 38,000, and he has placed 6,000 more officers on the beat. In a second term, he promises: “We’ll put a police officer in every school.”

But the mayor has encountered many problems:

* A recent state report on racial violence in 1991 in the Crown Heights section of Brooklyn was highly critical of his Administration.

* Serious ethical questions about the awarding of a $150-million contract by the city’s parking violations bureau forced Dinkins to ask his budget director to resign.

* The fire commissioner then suddenly quit, accusing mayoral advisers of anti-Latino bias. He promptly joined Giuliani’s campaign team.

* On top of all that, public schools failed to open on time this year for the city’s 1 million students because inspections for asbestos turned out to be incomplete and fraudulent.

In recent weeks, Dinkins has worked hard to make Giuliani the issue. The mayor accuses his opponent of running for “warden,” and has sought to link him, as a Republican, to neglect of the cities by the Ronald Reagan and George Bush administrations.

“The next time someone asks you how our city lost jobs, ask Rudolph Giuliani for the home phone numbers of Ronald Reagan and George Bush,” he says.

Meanwhile, racial tensions in the contest have shown no signs of abating.

Three days before the election, the Rev. Louis Farrakhan, who has angered many Jews with anti-Semitic statements, is scheduled to hold a rally in Yankee Stadium. Giuliani has compared the city’s renting the field to the militant Muslim minister to letting “Neo-Nazis and skinheads use it.” He says as mayor he would not have granted a permit.

Dinkins, who denounced Farrakhan as early as 1985, has defended his appearance on the grounds of freedom of speech. But signs exist that the rally already is having reverberations in the Jewish community. The mayor canceled a speech before a Jewish group on Tuesday because some members were upset that he had been invited.

The most memorable quote of the campaign so far has not come from either candidate. It came from Clinton at a $1,000-a-plate fund-raising dinner for Dinkins. The President implied that a vote for Giuliani might be racially motivated.

“Too many of us are still unwilling to vote for people who are different than what we are,” the President said. “This is not as simple as overt racism. . . . It is this deep-seated reluctance we have to reach out across these lines” and take “a leap of faith.”

His remarks prompted quick reaction.

“I hope his knowledge of figures on the health issue are a hell of a lot better than his knowledge on racism,” said David Garth, Giuliani’s chief strategist and media consultant. “I would hope he didn’t do it knowingly, but he opened the gates for everyone to play the race business, which of course serves to get the attention away from David Dinkins’ record.”

Meanwhile, a black minister supporting the mayor charged that “fascist” elements supported Giuliani. Another Dinkins surrogate, the head of a black police officers group, attacked former Rep. Herman Badillo, the candidate for controller on Giuliani’s ticket, for marrying a woman who is not Puerto Rican. Badillo, whose roots are Puerto Rican, married a white Jewish woman.

Rep. Charles B. Rangel (D-N.Y.), a close friend of Dinkins, alluded to the fact that Badillo, an orphan, did not even know who his parents were.

In television ads, Giuliani’s wife and Badillo accuse Dinkins of seeking to capitalize on the race issue.

“The Dinkins campaign is trying to make this an election about race because they want to avoid the issue of competence,” Badillo charges, speaking directly into the camera. “The city needs all of us to get along. David, you know better. End this now.”

The mayor, who has disavowed comments by his supporters, argues that it is Giuliani who is practicing racial politics.

Political strategists say Giuliani’s biggest problem on the issue of race stems from his closeness with the Patrolmen’s Benevolent Assn. Last year, Giuliani addressed a rally of the association at City Hall that got out of hand. Some officers carried signs reading “Dump the Washroom Attendant” and threatened to storm the building even though Dinkins was not inside.

With three weeks before the election, no debates between the candidates have been scheduled. Dinkins insists that George J. Marlin, the standard-bearer of the Conservative and Right to Life parties, be included, a position that Giuliani opposes. In so tight a race, the former prosecutor’s advisers worry that giving Marlin television exposure could result in his siphoning away just enough votes to ensure Dinkins a second term.