Although it might not be his toughest race to date, seven-term Rep. Mark Souder (R-Ind.) said he has no doubt that 2008 is his toughest year yet.

“The year is as tough as any year that I’ve run,” Souder said in a phone interview Monday afternoon. “The last time my challenger was a lot tougher. … But it’s hard to think of a worse year to run as a Republican than this one.”

Enter Attorney Mike Montagano (D), this year’s challenger, who had more money in the bank than Souder at the end of June.

At the tender age of 27, Montagano impressed the Democratic Congressional Campaign Committee enough to put Indiana’s 3rd district on its list of “emerging” races to watch. Souder is quick to point out that his 2006 opponent, longtime Fort Wayne City Councilmember Thomas Hayhurst, was also on the DCCC’s emerging races list and lost by 8 points.

But both Montagano and Souder acknowledge that what’s different this year is that the presumptive Democratic presidential nominee, Sen. Barack Obama (Ill.), is playing in Indiana and the district’s former Congresswoman, Jill Long Thompson, is the Democratic nominee in a competitive gubernatorial race.

Montagano said his internal polling shows Long Thompson well ahead of Gov. Mitch Daniels (R) in the 3rd district. The northeastern Indiana district was also one of only two districts in the state that Obama won over Sen. Hillary Rodham Clinton (N.Y.) in the May 6 Democratic presidential primary.

Still, President Bush took 68 percent of the vote there in the 2004 White House election.

But then there’s the money. Montagano raised more than Souder in the second quarter of this year, raising $141,000 from April 1 to June 30 compared with $90,000 for Souder in the same time period.

“We are much better-financed than any other candidate that has challenged Mark Souder,” Montagano said.

Montagano also has more in the bank than Souder: $352,000 in the Democrat’s bank account versus $323,000 in the Congressman’s coffers.

Souder is the first to admit that fundraising is not his strong suit. For the first time in a long time, he said, he’s had to focus on fundraising instead of more general campaigning.

“I’m not good at dialing for dollars,” he said.

Montagano can also chalk up about $100,000 of his fundraising to labor unions, who consider Souder a target because of his opposition to the Employee Free Choice Act.

Meanwhile, Republicans attempt to paint Montagano as a carpetbagger. Montagano moved back to the Elkhart region in March 2007 after working as a lawyer in Indianapolis for a couple of years and attending law school and college in state, but out of the district.

“Mark Souder is well-entrenched in the district and has a mile-long record on behalf of the people of the 3rd district, which is quite the opposite of Indianapolis lawyer Michael Montagano, who is an opportunist with virtually no relationship with the 3rd district,” said National Republican Congressional Committee spokeswoman Julie Shutley. “This is not a realistic pickup opportunity for the Democrats.”

Montagano notes that his family has a long history in Elkhart County, which is just east of South Bend. About half of the population in the district resides in the Fort Wayne, which also has 70 percent of the media market in the district.

“This is an area that our family has deep roots in,” he said.

Montagano insists that his message of change will carry voters over to his column.

“First and foremost, this is a year of change,” he said. “I am a candidate who is vastly different from the incumbent. … Mark Souder is out of touch, more than years in the past.”

So far, polling in the district has been sparse. Souder has yet to survey the field and Montagano released a single survey in late May.

The Cooper and Secrest Associates survey of 504 likely general election voters showed Souder leading Montagano 55 percent to 28 percent in a trial heat. The poll, taken a week before the May Democratic primary on April 24, 26 and 27, had a margin of error of 4.4 points.

The poll also showed Souder had a job-approval rating of 46 percent. Democratic Congressional Campaign Committee spokesman Ryan Rudominer said voter discontent with Souder would push Montagano across the finish line.

“Out of touch with Hoosier values and completely arrogant, Congressman Souder will be held accountable in November for his unyielding loyalty to President Bush’s failed politics,” Rudominer said. “In stark contrast, Michael Montagano is winning over Hoosier families with his fresh approach and his message of bringing people together to end our dependence on foreign oil, create jobs and deliver change.”