KANSAS CITY, Mo. -- While the giants of the bond industry debate disclosure of political contributions, tiny Zahner & Co. has begun voluntarily reporting that it has no such links to issuers.

The brokerage, based here, is believed to be the first in the nation to make such a disclosure.

"It's very disguting to lose a competitive sale if you know the votes are already obligated to somebody else because of previous political contributions," said Jack Dillingham, vice president at the firm.

Even though the issuers did not ask for it, the employee-owned brokerage last week began disclosing its political relationship with local officials in bond documents.

In a 21-word statement, the firm said, "The underwriters and employees of the underwriters have not made political contributions to any candidate for public office in the city."

The firm made the disclosure in the official statement for a $5.1 million revenue bond deal for the Lee's Summit, Mo., Municipal Building Authority co-managed with Lehman Brothers. The disclosure also will be included in a $4.9 million general obligation issue for Blue Springs, Mo., expected to be priced this week by Zahner.

"Political contributions made in behalf of Lehman Brothers are a matter of public record at the municipalities where we make them," said Steven Faigen, a spokesman for the firm. "Therefore, additional disclosure is left to the discretion of the issuer."

Asked if that meant the firm supported the voluntary disclosure, he responded, "Our position is not an endorsement."

Other Wall Street firms did not return phone calls seeking comment.

Zahner's decision to make the disclosure comes as bond dealers nationally debate the role political contributions play in competition for bond deals.

Just last week, the Municipal Securities Rulemaking Board cautioned underwriters that such contributions can create the appearance of bribery and erode investor confidence. The board stopped short, however, of publishing voluntary procedures for disclosing political contributions made to municipal officials.

"They [Zahner] are the first that I know of to do it," said Kit Taylor, executive director of the MSRB. "God bless them.

"The feeling of the board is that if political contributions are given, they should be given for the right reasons and not to influence business," he said.

Officials at Zahner said they decided to include the disclosure after Florida banned firms that contribute to policymakers.

"It would be nice if for once the industry did something like this before being made to do it," said Dennis Mitchell, a Zahner vice president. "Our business today would be much different if people had conducted themselves differently."

For instance, he noted restrictive provisions of the Tax Reform Act of 1986 aimed at curbing abusive deals.

"When people do things like that," he said, "we can expect more regulation."

Because Zahner is not politically active, it is not likely to have to disclose any contributions it might give its clients -- which are generally issuers with deals of less than $10 million.

So far in 1991, Zahner ranks 169th as senior manager nationally, with 15 deals, totaling $23.4 million, according to Securities Data Co./Bond Buyer.

"We don't have the resources to throw $5,000 at a candidate," said William Henderson, vice president and secretary of the firm. "It's a game that has made public finance no fun anymore."

Mr. Henderson said he donated $100 to a candidate for mayor of Kansas City, but added that gifts that small are not intended to influence underwriting contracts.

Frank Toplikar, the firm's president, said, "We contribute to bond elections, but that's about it."

That sort of contribution is not meant to influence the awarding of bond contracts, Mr. Toplikar and others at the firm said. Instead, they said, investment bankers acting as fund-raisers for politicians are the ones seeking influence.

In Lee's Summit, a city of 46,000 near Kansas City, an official said political contributions have never influenced who underwrites the city's annual bond deals.

"It never has been an issue in Lee's Summit, but there's always a potential for it," said Rick Curneal, acting city administrator. "A disclosure like this makes us more confident in the job they $(Zahner$) are doing."

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