State defends effort to lure businesses to Md.

Lawmakers question ties of Preakness '03 attendees

General Assembly

March 17, 2004|By Howard Libit | Howard Libit,SUN STAFF

Maryland's top economic development official defended yesterday his agency's business recruitment activities at the Preakness Stakes, as lawmakers called on him to give a more complete accounting of who attended the state's party and where the money came from to pay for it.

In a hearing before a pair of House of Delegates subcommittees, Business and Economic Development Secretary Aris Melissaratos rejected accusations that the state traded access to the governor in exchange for donations to a private nonprofit corporation established to help the department defray the costs of its Preakness party.

"Are we back to selling nights in the Lincoln bedroom?" Melissaratos said in response to questions from Del. James E. Proctor Jr., a Prince George's County Democrat, about "selling time to the governor."

"I think Maryland is beyond that," Melissaratos said. "We don't sell time to the governor. We have a popular governor. We need to build him up, rather than tearing him down."

But the secretary said he does not know which individuals or private companies gave money to help pay for the state's Preakness activities, and he said it's not his place to push the nonprofit group that raised the money to release the list of donors. He acknowledged that top members of the governor's staff, including the chief of staff and deputy chiefs of staff, helped recruit people to establish the group, but said they were not directly involved in raising money.

"I can ask, but it's up to them," Melissaratos said of the group headed by comic book company owner Steve Geppi, which has refused to release the list. He said he has not decided whether to seek private funds for this year's race-day party.

Yesterday's 80-minute hearing was called by House Speaker Michael E. Busch in response to articles in the Washington Post on the department's business recruitment efforts during the 2003 Preakness. Busch, an opponent of the governor's proposal to legalize slot machines, believes some aspects of the agency's activities raise questions about the administration's ties to the gambling industry.

The newspaper reported that a nonprofit organization set up by backers of Gov. Robert L. Ehrlich Jr. sought to collect contributions to help the agency defray the costs of its party. While the department invited the chief executive officers of all Fortune 500 companies, only seven attended - including the chief executive of the hotel and casino company MGM Mirage.

Melissaratos told the subcommittees that the state spent $205,000 on its 2003 Preakness activities - less than half of what was initially reported by the Post, but more than had been spent in previous years.

In addition, the nonprofit raised about $90,000, he said. About $65,000 of that went to additional Preakness party costs, and the rest paid for a golf outing and Orioles game reception for the business executives.

Much of the department's higher cost was tied to the state's refusal to accept a discount from the Maryland Jockey Club for its party tent - making the cost $179,000, or $105,000 more than in 2002. "Given the polarization on the tracks in Annapolis in relation to the whole slots issue, it would not be appropriate for us to accept a discount from the Jockey Club or Magna," Melissaratos said.

Some lawmakers questioned why the department spent $6,700 to pay for rooms at the Harbor Court Hotel for the out-of-town Fortune 500 executives, particularly when one of those executives is from a gambling company.

But Melissaratos said it's been the practice for years for the state to pay for hotel rooms for out-of-town executives coming to the Preakness - and he said the Harbor Court is part of his department's "red carpet" treatment as it tries to sell Maryland for economic development.

"We're not going to put them up at a Super 8 because that's not the kind of image of Maryland we want them to have," Melissaratos said.

The secretary said two recent business deals can be at least partly traced to entertaining done during the Preakness - a new FedEx Corp. distribution hub near Hagerstown that is expected to create 700 jobs, and an American Healthways call center in Howard County with more than 200 jobs.

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