RANDALLSTOWN, MD. -- From Republican William S. Shepard's viewpoint, it's like campaigning in a monarchy: His opponent in the Maryland governor's race has cornered most of the money, intimidated potential supporters and, perhaps the worst affront, refused him the honor of a debate.

But the frustration he feels, Shepard says, makes his race against incumbent William Donald Schaefer all the more important. Whatever the result, he wants Marylanders to know that when the polls open on Nov. 6, they have a choice.

"I heard a major banker say, 'Gee, I cannot sign a letter for you . . . to sponsor a dinner because 'he' would find out," Shepard said after a community forum in this suburb west of Baltimore.

That problem seems to crop up frequently for Shepard and his wife, Lois, the GOP nominee for lieutenant governor. Their races began as long shots, and survived an opponent in the primary who ran because he was annoyed at the prospect of a husband-and-wife political team. Now, with eight days before the general election no one, including the candidates, thinks the odds of an upset of Schaefer have much improved.

Shepard and his wife get warm responses at forums such as the one here recently, scoring points with their criticism of Schaefer's spending habits and, in this case, the governor's unwillingness even to send a surrogate to debate about the next four years. But that has not been enough to convert state business and financial leaders, who have helped back Schaefer to the tune of $2.3 million.

The result is a Republican effort long on position papers but short on exposure. Shepard, a retired Foreign Service officer from Potomac, has prepared treatises on state spending, crime, the environment, education and transportation. But he has been able to raise only slightly more than $100,000 so far, and is $28,000 in debt, even with the fund-raising help of GOP notables such as National Drug Control Policy Director William Bennett. That means no television ads, and a campaign limited to meeting voters a few dozen at a time.

"If we had the money, we could win," said Lois Shepard. "The more people that hear Bill . . . the more people not only say they are with us, but are rooting for us."

Compared with Schaefer's and Lt. Gov. Melvin A. Steinberg's, theirs is a modest effort. Along with the trappings of a modern media campaign, the governor augmented what may be his final race for office with an "apolitical" effort to encourage civic activism. He and his top officials then toured the state in the governor's "Do It Now" bus, often combining campaign appearances with official announcements and visits to businesses, offices or other facilities that the state has assisted.

Still, the challenger says, his message is getting across to those who hear it.

This is Shepard's second run for office in Maryland. A New England native and Harvard University Law School graduate, he ran unsuccessfully in the 1986 GOP primary for the congressional seat now held by Rep. Constance A. Morella (R), of Montgomery County. Before that, he was on the last leg of a diplomatic career that included assignments in wartime Vietnam, Hungary, and finally France.

He alludes to his experience abroad often in discussing Schaefer, comparing the dominance of the Democratic Party in Maryland to that of other one-party systems abroad. Dissidents aren't jailed in Maryland, Shepard said, but Schaefer's image of control does discourage open discussion.

He characterizes Schaefer's refusal to debate, for example, as part of an administration effort to hide until after the election the plans for a tax increase, the magnitude of a state budget shortfall, and growth controls -- all issues under study in the state.

He argues as well that Schaefer and his supporters have tried to stifle opposition, despite a commanding lead in polls and fund-raising. The governor, for example, supported the impoundment of a million-dollar public fund set up to help finance gubernatorial campaigns. The fund was created through voluntary taxpayer contributions, but won't be available to gubernatorial candidates until 1994, when Schaefer leaves office. And when members of the Maryland Classified Employees Union voted to let Shepard address their convention in September, union leaders, who already had endorsed Schaefer, subsequently sent a letter asking members to correct that "travesty" by volunteering for a Schaefer phone bank.

"It's the Wizard of Oz," Shepard said of the governor. "You get behind the curtain and here is this little guy and he has got all the machinery . . . . People realize that when you have got somebody who will not debate, added to the aura of this governor, that is not normal, that is not part of the way we do."

A former Democrat who split with the party during the Carter administration, he describes himself as a fiscal conservative who retains moderate views on most social issues.

While Schaefer recently announced that he supported abortion rights, Shepard opposes abortion in all but extreme cases such as rape or incest. He thinks the issue should be put to the voters and says he would support the outcome of such a referendum.

High on his agenda, he says, would be aid to the disabled, the elderly and the poor. Indeed, his main complaint with Schaefer is that the governor is too impulsive and too oriented toward bricks and mortar, a style not suited to a society in which resources are scarce. Shepard said his emphasis would be on helping people while trying to avoid a tax increase.

"You have a governor widely considered to be a spendthrift," said Shepard. "I'm a planner."

Shepard says, for example, that he would put the Baltimore light rail line, already costing more than projected, on hold until a statewide commuter study could determine the highest priority transportation projects in both urban and rural areas. The new Baltimore baseball stadium is too far along to halt, Shepard said, but a planned football stadium would have to be built with private funds if he is elected.

And when the time comes to discuss financial aid for the state's poorer subdivisions -- an issue Schaefer, as former mayor of Baltimore, will likely try to press in a second term -- Shepard contends that he would be an effective advocate as a fiscal conservative and resident of wealthy Montgomery County.

In a sense, Shepard's arguments are predictable. Schaefer has governed during a period of expansion that has allowed him to court business with new loan and grant programs, push for large projects such as the light rail line, and still expand funding for education and some social programs. The state is projecting a budget shortfall, but not one as serious as those expected in Virginia or some northeastern states.

With no major scandals and Schaefer's popularity apparently improving in the Washington suburbs, an area that initially viewed the governor warily, there's little left for a challenger to do but quibble about the details, said Schaefer's campaign manager, Jim Smith.

"We don't pay attention to their campaign," Smith said. "He has been governor for four years and has clearly demonstrated he has complete command of the issues. There is not the same need to demonstrate he knows the problems. He wants to spend the time talking to people around the state."

If Shepard does not capture the governor's mansion, many Republican leaders will not feel that his effort has been wasted. For the state Republican Party, having a full slate of candidates to run is something of an achievement, and Shepard, as head of the ticket, has acquitted himself well in the eyes of the party, said state GOP Chairman Joyce L. Terhes. If Republicans pick up seats in county government or the legislature, that would be remembered if Shepard decides to run for office again, Terhes said.

BUDGET AND TAXES:

Put the lieutenant governor in charge of the state budget to "root out waste and streamline the state government." Comply with spending affordability guidelines similar to those already used by the General Assembly.

Place county piggyback income tax revenue, a major source of funds for counties such as Montgomery, off limits as a source of money for increased state spending.

Oppose tax increases "without a clear showing that otherwise needed public services would be curtailed." EDUCATION:

Supplement the federal Head Start program with locally based early childhood programs.

Emphasize "structured homework" beginning with first-graders to instill a "study ethic" in students. CRIME AND CORRECTIONS:

Double the minimum sentence required before a violent offender is eligible for parole.

Install sentencing guidelines to make sentences uniform for similar crimes and discourage the use of plea bargaining by prosecutors. TRANSPORTATION:

Halt construction of the Baltimore light rail line pending completion of a statewide transportation study.

Emphasize maintenance of existing roads and bridges to save money and avoid future gas tax increases.