Madison-area developer Terrence Wall dropped out of the U.S. Senate race Thursday, saying it was the honorable thing to do, but he stopped short of endorsing any of his fellow candidates for the Republican nomination.

“I’ll continue to be involved in getting our country turned around, but it’s time for me to take a step back and take a hard look at how we move our country and the Republican Party forward,” Wall said in a statement.

His departure leaves two Republican candidates fighting for the chance to face Democratic U.S. Sen. Russ Feingold in November: tea party favorite Ron Johnson and Watertown businessman Dave Westlake. Former Commerce Secretary Dick Leinenkugel dropped out of the race at last week’s GOP convention and endorsed Johnson.

Wall’s announcement comes just four days after he lost the his party’s endorsement to Johnson, an Oshkosh businessman with no political experience. Johnson entered the race less than a week before the convention.

“If you said there was a candidate who entered the race five days before the convention and five days later stood as the odds-on favorite, you would think that candidate was (former GOP Governor) Tommy Thompson,” said Charles Franklin, UW-Madison poltical science professor. “Instead, it’s a guy most of us have not heard of before.”

Despite having a resume similar to Johnson’s, Wall never gained traction with Republican voters and suffered from some bad publicity, Franklin said.

Earlier this year, the State Journal reported Wall, a millionaire real estate developer, paid no net taxes in nine out of the previous 10 years, except in 2005 when he paid $43,520.

His staff accused Democrats of trying to mislead the public and said Wall’s companies paid more than $30 million in taxes over the last five years. Still, many experts felt the issue could haunt Wall during the campaign.

“Not paying taxes is a major issue,” said Jim Klauser, one of Wall’s honorary campaign co-chairs. “I think that threw a cloud over his whole campaign.”

Klauser called Johnson the best Republican candidate this year and said the party should unite behind him. Reince Priebus, Republican Party of Wisconsin chairman, thanked Wall for helping the party spread its message to voters.

“I … respect his decision to exit the race at this time but look forward to continuing together our efforts to elect a new senator for Wisconsin,” Priebus said.

In a statement Thursday, Johnson thanked Wall for running a good campaign and wished him well. Westlake, however, expressed sadness over his opponent’s departure. “He’s put in a lot of time, a lot of effort, a lot of hard work and a lot of money,” Westlake said. “I am sorry to see his campaign end this way. I truly am.”

Westlake said the chances of him dropping out were “zero, absolutely none.” Too many supporters have bought into his message of smaller government and fiscal responsibility, he said.

Wall, 45, was mounting his first statewide race after failing in both 2001 and last year to get elected to the village board of Maple Bluff. He had called himself a fiscal conservative and said he based his campaign around the need to create jobs, cut government spending and reduce taxes.

“We did show that we could win this race and we did so running an honest, clean campaign,” Wall said. “Last October, the polls showed us down double digits and few had heard my name outside of Dane County. Recent polling now shows that we have closed within the margin of error.”

Feingold has been in the Senate since 1992 following a 10-year stint in the state Legislature. Feingold won his last race in 2004 against Republican Tim Michels by 11 points.

The Associated Press contributed to this report.

Contact Clay Barbour at cbarbour@madison.com or 608-262-6129; contact Mary Spicuzza at mspicuzza@madison.com or 608-252-6122.

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