Republican Del. Luiz Simmons, clearly staking out his battle ground in his bid for Montgomery County executive, said yesterday the key campaign issue will be whether incumbent Charles W. Gilchrist used the county's employe merit system for his own benefit.

"During the last two years the Gilchrist administration has been consumed by a series of controversies which have undermined the integrity and independence of county government," Simmons charged at a press conference.

A poll Simmons said he commissioned in April showed that 47 percent of the 400 voters questioned said that Gilchrist has handled a long-running merit system dispute improperly; 31 percent said he acted properly and 22 percent were undecided.

In his campaign, Simmons said he hopes to build on this concern about the merit issue.

"Will the lesson of the campaign be that you can play fast and loose with the public trust, suffer public embarrassment, and still win elections?" Simmons asked. "Or will the lesson be that elected officials who break faith with the public interest and abuse public trust can expect to pay the price at the ballot box?"

Simmons said that Gilchrist owes voters an explanation for his administration's becoming entangled in three controversies, including questions of why Gilchrist permitted Charles Buscher, who worked in his 1978 election campaign as a fund-raiser, to advise him when Buscher was under federal indictment in 1978 for 17 counts of bribing government officers and employes in West Virginia.

Simmons also raised the issue of Gerard Evans, a top Gilchrist assistant who has admitted under oath that he took a low-interest loan from Buscher at the same time Evans was working to get a county government job for one of Buscher's relatives.

Also, Simmons complained about Buscher's nephew being hired earlier this year as deputy director of the county's Department of Liquor Control.

Gilchrist said Simmons was trying to base his campaign on "extravagant language and name-calling" rather than on serious issues.

The county executive noted that the issues raised by Simmons have been investigated by both county and state investigators.

"Their findings were the same: No improper conduct," Gilchrist said.