Mayor Kurt L. Schmoke said yesterday he will withhold the city's contribution to the financially troubled Preakness Celebration until the nonprofit group deals with its $1 million deficit.
Preakness Celebration Inc.'s executive director, Donna Leonard, was suspended without pay this month for overspending her $750,000 budget by nearly $1 million. The state attorney general's office has launched an investigation into how the debt was incurred.
Mr. Schmoke said he ordered that the $75,000 the city contributes to Preakness Celebration, which made up 10 percent of the group's budget this year, be held up for now.
"Obviously, I'm very concerned about that matter," Mr. Schmoke said during his weekly news briefing. "We have frozen our contribution until these matters can be straightened out."
Preakness Celebration received $50,000 last year from the state. State officials said they would continue to contribute only if the celebration's board of directors comes up with a business plan to better manage its finance.
"And that the business plan must be endorsed, not just by us but by the Preakness Celebration's private-sector supporters, and the city as well," said R. Dean Kenderdine, assistant secretary of the state's Department of Economic and Employment Development. Preakness Celebration Inc. was founded seven years ago to coordinate a week of events leading to the running of the Preakness Stakes each May. This year, to attract more attention to the celebration, several musical events were planned featuring big names in country, rock and jazz.
A two-day jazz festival at Rash Field attracted few patrons and was singled out by Preakness officials as a financial drain.
Mr. Schmoke said the organizers may have been too ambitious. "What they did this year was they ratcheted up the scale of activities," Mr. Schmoke said. "They probably moved too quickly."
This year was not the first time that Preakness Celebration found itself in the red. After coming up more than $35,000 short in 1992, the organization scaled back on events, including canceling the 1993 Preakness Parade. It was reinstated last year.
Preakness Celebration's board of directors met yesterday and began taking steps to deal with the shortfall. It hired Baltimore attorney Mark J. Friedman, a business reorganization specialist with Piper & Marbury, to plot a course for paying the organization's creditors.
"For some of them we may be asking them to consider what amounts to a forgiveness, as a charitable contribution to the event," Mr. Friedman said. Others will be paid as soon as funds become available.
Mr. Friedman said businesses that contribute to next year's Preakness Celebration will be assured that their money will not be used to retire the debt.
The board did not take action yesterday on Ms. Leonard, said board Co-Chairman Barry F. Scher.
"Her suspension remains in effect for the time being as our investigation . . . continues," he said.
Mr. Scher said an accountant is auditing the books to determine the exact amount in outstanding bills. "The book work that was kept was in poor condition," he said.