WASHINGTON--If their records running two very different states are any guide, Democratic presidential candidates Bill Clinton and Jerry Brown could not be further apart in their attitudes toward state and local finance issues.

Mr. Clinton, the governor of Arkansas, comes from a small, poor state with a plethora of towns that have trouble gaining access to the credit markets. He is described as a government official who has used tax-exempt financing as a tool to infuse those towns with cash and foster economic development.

Mr. Brown, who governed California from 1975 to 1983, presents a different picture. He is remembered both as a visionary and a dreamer for his interest in space fight and windmill energy, but observers say he spent little time on tax-exempt financing when he led the country's biggest state.

One thing the two men have in common is that neither talks about municipal financing on the campaign trail. Their literature makes only fleeting references to bonds, and at least some of their economic advisers are unfamiliar with the subject.

Discerning Mr. Clinton's views is particularly easy, because he helped create the Arkansas Development Finance Authority and is a member of the Anthony Public Finance Commission. Mr. Clinton has been Arkansas's governor for a total of 12 years: from 1978 to 1980, and then from 1982 to the present.

"Bill's always been very supportive of tax-exempt financing," said Marc E. Lackritz, the executive vice president of the Securities Industry Association. Mr. Lackritz knew Mr. Clinton when both were Rhodes Scholars at Oxford University in the late 1960s.

Mr. Lackritz pointed to Mr. Clinton's service on the Anthony Commission, which the government joined at its inception in 1988. The group was formed by Rep. Beryl Anthony, D-Ark., to study how federal tax laws were impeding issuance of and demand for tax-exempt bonds.

Mr. Clinton hosted an all-day meeting of the group in Little Rock soon after it was formed. "It was really exciting that a governor would be interested and come," said Catherine L. Spain, the chief lobbyist for the Government Finance Officers Association.

"He was there with his jacket off and his shirtsleeves rolled up," said Ms. Spain, who attended the meeting as a staff member for one of the commission members, Jeffrey S. Green, the general counsel of the Port Authority of New York and New Jersey. South Carolina's governor, Carroll Campbell, was also at the meeting and has shown an active interest in the group, sources said.

Mr. Clinton "probably understands these issues very well," Ms. Spain said. "I think you probably couldn't find any presidential candidate who's been more involved" in the complexities of state and local finance.

Another commission member was not as impressed. "I never saw any evidence he thought it was that critical," said the member, who asked not to be identified. "I don't remember Clinton expressing a view on any given subject."

But the commission member recalled that Bob Nash, Mr. Clinton's choice to head the Arkansas Development Finance Authority in 1988, also served on the commission and spoke out very forcefully in favor of easing tax law bond curbs.

"Bob was Bill's point man, and I thought he was pretty good, pretty well informed," the commission member said.

Wooten Epes, an attorney who helped Mr. Clinton create the development authority in 1985 and served as its first president, said the governor "saw the use of tax-exempt financing as a major part of economic development in Arkansas" and took "a very expansive view of what tax-exempt bonds could do.

Mr. Epes, now a partner with Kutak Rock in Little Rock, said one of Mr. Clinton's main concerns as governor was to give small towns a leg up in gaining access to the credit markets.

"His idea was to import investment capital from other parts of the country," Mr. Epes said. He saw a big contrast to Mr. Brown's experience, coming from the largest state in the union. "California could be a separate nation unto itself," he said.

Arkansas's outstanding debt is $121.93 million and debt per capita is $51.57. The state's budget for fiscal 1993 is projected at $7.8 billion. California's outstanding debt last year was $12.7 billion, more than Arkansas's entire budget. Debt per capita last year for the state was $297.

Mr. Clinton "has always seen the need for a state like Arkansas to do more with less," Mr. Epes said, and he realizes that tax-exempt bonds are "a way for [small] communities to engage in fairly responsible leveraging."

For example, since 1985 the authority has provided $2.3 million in financing for seven cities to make wastewater and sewer improvements, and $45 million in loans so that cities could build prisons.

The authority's Speculative Building Loan Program has assisted local industrial development corporations in financing speculative structures. To date, five buildings have been financed, with loans totaling $698,500, and two of the buildings have been sold to companies, creating 400 jobs, according to the authority.

The one reference to tax-exempt bonds in Mr. Clinton's campaign literature involves mortgage revenue bonds, a major financing tool of the Arkansas authority. Mr. Clinton's position papers state he favors continuing the tax exemption for mortgage bonds, which is scheduled to expire June 30.

The National League of Cities, analyzing Mr. Clinton's position on state and local finance, found he wants to increase cooperation between the various levels of government, with a program he calls "A New Covenant for America's Cities."

The proposal would include revamping the Urban Development Action Grant program, providing incentives for banks to invest in urban areas, and setting up a national network of small business community development banks.

Mr. Clinton's tax policies include support for using tax-exempt financing "in building infrastructure, housing, and other public projects," according to the league's analysis.

Mr. Brown, meanwhile, is much more of an unknown quantity in the area of tax-exempt finance, despite his dozen years presiding over California's government. That in large part is due to the legendary Jesse Unruh, who exerted tight control over the state's finances from 1975 to 1987, when he died in office.

Local officials in California who remember Mr. Brown's tenure as governor had little to say about his actions regarding tax-exempt bonds, instead stressing Mr. Unruh's role as state treasurer.

"I don't know if [Mr. Brown] took an active role" in making decisions about bond issues, said George Feroni, the finance director for Anaheim. "Jesse Unruh really had an iron hand on tax-exempt financing."

"I don't think [Mr. Brown] really had a big relationship with local governments," said Jack Crist, the assistant city manager of Sacramento. "Jesse built quite a Treasury empire at the state of California, both politically and financially."

One major development during Mr. Brown's tenure was the creation of the California Debt Advisory Commission, which marked "the first time the state of California had any role in issuance of debt for local governments," Mr. Crist said.

Again, however, Mr. Brown did not have a hand in the commission's creation or operation. The panel was created in 1981 at the urging of Mr. Unruh, according to Steve Juarez, spokesman for the commission. There had been concern in the marketplace that too many California localities were issuing too much debt, and the commission was designed to monitor those activities.

Mr. Brown's campaign staff was not forthcoming about his views on tax-exempt financing, but one staff member discussed the subject briefly.

"He has talked about using bonds for the rebuilding of our infrastructure," said the staff member, Lorraine Suzuki. But she added, "He's always throwing out ideas, and I don't know which ones are going to stick."

The League of cities was unable to determine what Mr. Brown's municipal policy was. For his tax policy, the league listed only such ideas as "allow tax amnesty" and "cut payroll taxes."

Mr. Brown's campaign papers refer to municipal finance in passing, stating that during his time as governor, "industrial development bonds were [issued] to allow local governments to issue bonds to promote the modernizations and expansion of industry."

The campaign literature does address at length the need for greater economic development, which presumably could be financed with tax-exempt bonds. But it also includes another proposal that would have a major negative effect on the municipal market: the flat tax.

Mr. Brown's proposal would replace the three-tiered income tax structure for individuals with a single 13% rate and wipe out all deductions, except those for mortgage interest and charitable contributions. That would mean individuals would be required to pay income

Mr. Feroni strongly criticized the flat tax proposal, saying it "would have a dramatic impact on the ability of state and local governments to sell municipal bonds."

He predicted that if municipal bond interest were included in the tax, state and local interest costs would rise by 300 to 400 basis points. "It would really hamper both state and local ability to raise low-cost funds," Mr. Feroni added.

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