Maryland Senate committee voted today to strip an amendment from a House-passed bill that would have exempted Crown Central Petroleum, whose chairman of the board is cochairman of Gov. Harry Hughes' campaign committee, from paying a windfall profits tax.
The bill, which passed the House of Delegates last week, was amended by the Senate committee to remove the exemption after other oil companies in the state lobbied against it. Crown's chairman is Henry A. Rosenberg Jr., cochairman of the governor's finance committee.
The Senate committee then voted 7 to 6 to kill the windfall profits tax bill, leaving open the possibility of reconsideration.
The amendment that exempted Crown was introduced by the bill's sponsor, Del. Stewart Bainum Jr. (D-Montgomery) after a February meeting with Rosenberg. Bainum said today that before he met with Rosenberg, he was told by several legislators that he would have trouble getting the bill passed because of Rosenberg's friendship with Hughes and Baltimore Mayor William Donald Schaefer.
Rosenberg could not be reached for comment on the now-dead exemption, but a Crown lobbyist said Rosenberg met with Bainum, but did not lobby the administration for the bill.
The bill assumed extra importance last week when Hughes agreed to use the revenue the state would receive from the tax to pay for a measure to create community centers for the mentally retarded. Because of that promise, made by Hughes to Del. Lorraine Sheehan (D-Prince George's) in a March 30 letter, members of the Association for Retarded Citizens of Maryland have been lobbying the Senate vigorously for the windfall profits bill.
Sen. Laurence Levitan, chairman of the committee, said, "There was absolutely no reason to exempt Crown. I don't know why that amendment was on there. We killed it."
Hughes spokesman Lou Panos said today that Hughes and Rosenberg have never discussed the bill. "The administration took no position on this bill until Del. Sheehan came to the governor with the idea of coupling the bill with the bill to aid the retarded," Panos said. "The governor had no idea about the amendment or what the bill did. If he or anyone on the staff had known and did not act, you could raise the question of impropriety, but no one did.
"When Stewart Bainum did contact the administration about support for the bill before there was an amendment, it was turned down. To imply that there was any impropriety or wrongdoing is a pretty cold issue."
Bainum said today that he met with Rosenberg in Rosenberg's Baltimore office in early February. "I was over there visiting a friend and he took me by to meet Rosenberg," Bainum said. "We talked about a number of things. The governor's name came up but not in reference to this.
"Rosenberg . . . made a pretty good case for giving exemptions to small refiners so I went back and did some research on it."
Bainum said he was never contacted by Hughes or any of his staff about the bill after his meeting with Rosenberg. He said he met with Devin Doolan, Crown's lobbyist in Annapolis, to discuss Crown's exemption. He then drafted an amendment exempting all oil companies whose refinery capacity is less than 175,000 gallons of oil a day. The amendment, Bainum said, was aimed at Crown. According to Panos, two other small companies also were affected by the amendment.
Reached tonight, Doolan said he suggested the terms of the exemption to Bainum based on a now-defunct federal law that defines small oil companies. He said he suggested that Rosenberg talk to Bainum about the bill. "He told me that he had a meeting with Bainum and I said, 'talk to him about that damn windfall profits bill,' " Doolan said. "I said, 'Give him a lecture.' I thought it was unfair of the legislature to classify Crown with the big hitters.
"But I never contacted the administration about the bill before or after Stewart Bainum met with Henry Rosenberg . I'm very sensitive about that because of Henry's friendship with the governor."
Other oil companies in Maryland argued the measure would give Crown an unfair advantage. Shell Oil Co. wrote to members of the budget and tax committee urging that the bill and the amendment be killed.
"If we are paying a tax that Crown isn't paying our price is going to be higher than Crown's and that obviously gives them an unfair advantage," said Edward Scott, sales manager for Shell's Washington-Baltimore office. "We're against the bill in general, but we were especially against the amendment."
Members of Levitan's committee met privately this morning before their voting session. According to several of the senators, the Hughes administration was attacked for not red-flagging the bill earlier and for tying it to the bill for centers for the retarded.
"It's shoddy politics," said Sen. Julian L. Lapides (D-Baltimore) who voted for the bill after the amendment was killed. "This is the kind of bill we need. There's absolutely no reason for these giant companies not to pay taxes on their windfall profits and now it may die. Crown shouldn't be exempt, no one should be exempt. I'm disappointed by the whole process."