By Jeff Mason
COLUMBUS, Ohio (Reuters) - As Mitt Romney and Rick Santorum fight to win Ohio's presidential primary on Tuesday, Republican hopes of victory here in November may be jeopardized by lingering fallout over a labor rights dispute that left blue-collar voters cold.
A failed attempt by the state's Republican governor to limit collective bargaining rights for public unions last year altered the political landscape in this battleground state.
Ohio Democrats are enjoying greater fundraising and the unlikely return of middle class "Reagan Democrats" to the party after voters repealed a law championed by Governor John Kasich to limit collective bargaining rights for fire fighters, police officers, and other state workers.
"We had some of the best fundraising months in our state's history in an odd year, and those dollars came from ... low dollar donors that had not participated in the party but were drawn to it because of the attacks on collective bargaining," said Chris Redfern, chairman of the Ohio Democratic Party.
Online donations alone for the party quadrupled in 2011.
"It's indicative of a pendulum swinging in our direction, taking advantage of what occurred at the state level and now going into 2012 with a full head of steam," Redfern said.
An average of polls by RealClearPolitics showed President Barack Obama ahead of Romney by 1.7 points and Santorum by 2.3 points in the state.
That is a turnaround in sentiment from 2010 when the state swung Republican, putting Kasich in the governor's office two years after siding with Obama over Republican John McCain.
Perhaps most worrisome to Republicans looking toward the next presidential election: the controversy upset members of their party, too.
"I am socially conservative, I am a registered Republican voter and voted a strict Republican ticket in 2010 - but I am voting with Democrats in '12," said Brian Barnhart, 33, a lieutenant with the Columbus fire department.
"The main reason is the attacks on workers that I have been seeing with the Republican Party," he said.
Barnhart voted for Obama in 2008 but favors the social policies espoused by Republicans - much like so-called Reagan Democrats, many of whom left the party for the social and economic positions put forward by the popular Republican president in the 1980s.
Redfern said he is working to keep those transient Democrats "home."
SHADOW OVER PRIMARY
The labor issue has cast a shadow over Tuesday's primary.
No Republican has made it to the White House in the last century without winning Ohio and its rich cache of electoral votes in the general election. The state holds 18 electoral votes this year; 270 are needed to win the White House.
Victory in Ohio would give Romney, the former Massachusetts governor, or Santorum, the former Pennsylvania senator, momentum and a claim to say he can win it again in November.
Republican officials downplay the repercussions of the repealed law, known as "Senate Bill 5" and "Issue 2" in Ohio.
"I don't think it will have nearly the impact that Democrats and labor are hoping," said Kevin DeWine, chairman of the Ohio Republican Party.
"The issues that are on the ballot this November are about Barack Obama and his stewardship of this economy. ... It's not going to be about a referendum that occurred a year ago."
But the issue has not gone away.
Romney made news last year when he visited Ohio and first declined to take a position on the controversy before later offering his full backing for the governor's effort to reduce public unions' rights.
"Ohio labor is going to remember that, and if they don't, I'm going to remind them," said Dave Spurrier, 61, a retired high school teacher at a gathering of Obama campaign volunteers in Hamilton.
Romney has taken an anti-union line as a candidate. He opposed the government bailout of Michigan's auto companies and the role unions played in their rescue.
Ohio also relies on auto-related jobs, so Romney's negative rhetoric on that issue along with his support of Kasich's collective bargaining crackdown were not lost on workers here.
"Mitt Romney said that he supported Senate Bill 5 and Issue 2, so he'll have a lot of explaining to do to police officers and firefighters, nurses, teachers and working people in general as to why he was on the wrong side of where Ohioans were," said Tim Burga, the president of the Ohio AFL-CIO, a labor group.
Unions play a critical role in Ohio elections. According to the AFL-CIO, union voters supported Obama over Republican McCain in 2008 by 60 percent to 39 percent. Union voters accounted for 13 percent of the overall vote that year and union household voters represented 28 percent. Union voters and households made up 21 percent of the national electorate in the same year.
HEALTHCARE AND AN IMPROVING ECONOMY
Republicans in the state play down the effect of the labor-led referendum and say Democrats were not the only ones taking names and building an organization last year.
They point to a separate Ohio vote soundly rejecting a requirement in Obama's signature healthcare reform law that everyone have health insurance as a more relevant and resonant issue in the White House race.
"That will actually be a presidential campaign issue, the healthcare law," said Republican strategist Bob Clegg, noting the U.S. Supreme Court was expected to issue a ruling that could strike down the law - derided as "Obamacare" by Republicans - this summer.
"We gathered literally millions of pieces of data about people who don't like Obamacare and signed the petition to put the rejection for Obamacare on the (Ohio) ballot," said DeWine, the Ohio Republican Party chairman.
Republicans acknowledge the labor issue could loom over the re-election bids of state lawmakers in November, however, while stressing that the economy would be the dominant issue in the presidential race.
But the economy could help Obama as much as it does a Republican. Unemployment dipped to 7.7 percent in the state in January, well below the national average of 8.3 percent and in line with positive economic trends nationally that Obama supporters say prove the success of his policies.
Kasich's office points to his tax cutting and budget discipline as contributing to Ohio's turnaround, and the governor - whose popularity plummeted after of the labor dispute - is also rebounding in the polls.
"We tried to give local governments an ability to save money. Voters didn't like it, and so that's fine. We heard them loud and clear," said Kasich spokesman Robert Nichols.
"We've moved on."
(Additional reporting by Eric Johnson; Editing by Alistair Bell)