Gov. William Donald Schaefer fired William F. Rochford as director of the State Lottery Agency yesterday, five days after he alleged that the governor ordered him to inflate revenue estimates for the agency's keno game last year.
Paul E. Schurick, the governor's chief of staff, informed the lottery director at a private meeting in Baltimore that he was being let go. Mr. Rochford, 68, a longtime friend and appointee of Mr. Schaefer's, headed the state agency for nearly seven years, of which the last two years were rocky.
"He's been relieved of his duties," Mr. Schurick said later. "He will leave state service . . . because of a series of missteps and miscues inconsistent with the goals of the administration."
Mr. Schurick refused to comment on whether Mr. Rochford's remarks Friday had anything to do with his being fired or to expand on what might have led to his sudden exit from the $76,000-a-year post with a year left in Mr. Schaefer's last term.
Mr. Schurick said the governor was disappointed with the lottery agency's "sales and revenues." The agency generated $302 million in revenues last year, the state's fourth-biggest source of general fund revenue. He said the lottery needed a "fresh, new" approach.
Mr. Schurick said Mr. Schaefer was unhappy about what he called the lottery's lack of appeal to the public and the public's perception of the agency, which has been tarnished in the last year by a grand jury investigation into a no-bid contract to start up the keno game.
Mr. Rochford, a retired 38-year veteran of the Baltimore Police Department, could not be reached for comment. His deputy and spokesman, Carroll H. Hynson Jr., also could not be reached.
On an interim basis, Mr. Schaefer named Lloyd W. Jones, director of the Maryland Department of Assessments and Taxation since 1990, to head the Lottery Agency yesterday.
The governor has turned to Mr. Jones for help in the past, most notably by appointing him director in 1987 of the Maryland Deposit Insurance Fund Corp., which was created to resolve the state's 1985 savings and loan crisis.
Mr. Schaefer, though hot-tempered, is extremely loyal and in the past has resisted pressure to get rid of controversial high-ranking officials.
The governor had steadfastly defended Mr. Rochford as the lottery director was criticized for failing lottery sales -- including last year's ill-fated el Gordo game -- the storm over a no-bid lottery contract extended to GTECH Corp. to include keno and about 1,200 keno terminals sitting unused in a Howard County warehouse.
But the last straw apparently was Mr. Rochford's comments after the state Board of Revenue Estimates announced a $106 million drop in projected lottery revenues. The board had predicted last year that lottery revenues for the fiscal year that began July 1 would be $421 million. The board revised that figure last week to $315 million.
That drop dampened a rosier economic forecast for the state by wiping out most of an unexpected $115 million revenue increase that had been forecast, leaving Mr. Schaefer little leeway in preparing his next budget.
Mr. Rochford said Friday that the reason the lottery revenues were so far off was that the governor asked him to inflate the original estimates.
He said that when he presented Mr. Schaefer with plans for keno in December 1992, he told the governor the new game would generate $100 million in gross sales in a full year. Mr. Schaefer ordered that the $100 million figure reflect the amount that would actually go into the general fund, Mr. Rochford said.
"We were asked to generate that much money," Mr. Rochford said Friday. "The governor asked me to do it. That's what we tried to do."
The lottery director's explanation was contrary to nearly every public presentation the Schaefer administration and the Lottery Agency had made regarding keno since plans for the game were unveiled.
It also left administration officials dumbstruck and, in Mr. Schurick's case, angry.
The chief of staff called Mr. Rochford's explanation "preposterous" and dismissed it, saying that "it didn't happen." He suggested that the pressure Mr. Rochford had been under "obviously affected his recollection."
In the wake of that episode, several administration officials said privately that Mr. Rochford's exit from the agency -- an independent agency with about 150 employees and a $50 million annual budget -- was just a matter of time.
One state official pointed to the agency's unsuccessful attempts to market keno to vendors, resulting in the storage of the 1,200 terminals. The official said that there is a direct correlation between the number of machines in storage and the revenue shortfall.
Maryland has the highest per-machine sales of any of the six states offering keno but has not managed to place enough terminals to boost revenues, the official said.