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"FEBRUARY 8, 2006 Lottery will replace $1B in state money Bill was changed after passage BY MOSI SECRET When Gov. Mike Easley signed the bill establishing a state lottery, it contained language that supported years of promises he made about the purpose and intent of the new source of revenue: "[N]et revenues generated by the lottery shall not supplant revenues already expended or expected to be expended for those public purposes, and lottery net revenues shall supplement rather than be used as substitute funds." But when the bill was amended to become part of the budget bill, that language was quietly dropped. Now, budget documents show that lottery money is already slated to replace appropriations from the general fund. A five-year budget forecast prepared by the North Carolina Office of State Budget and Management states that revenue from the "education" lottery will replace general fund money that is currently funding class-size reduction and More-at-Four, the state's pre-kindergarten education program for poor and at-risk 4-year-olds. Every year after the budget is passed by the General Assembly, the budget goes through a bond-rating review process to evaluate how creditworthy the state is. A state budget office PowerPoint presentation for the state's bond-rating agency shows that $62.5 million of lottery revenue will replace class-size reduction and More-at-Four appropriations from the general fund this 2005-06 fiscal year. A total of $66 million general fund dollars was originally budgeted for More-at-Four; $137 million was budgeted for class size reduction. "All of the academic research shows almost invariably that every state that has a lottery for a particular purpose, the lottery has supplanted funds previously devoted to that purpose," says Chuck Neely, an attorney at Maupin Taylor who was a spokesperson for Citizens United Against the Lottery, an organization that formed in 2001 to fight Easley's push for lottery legislation. "It's not surprising to me that this has happened in North Carolina." He continues: "The lottery is going to programs that are already funded by state government. We thought from the very outset that the funds would just go for those purposes." Dan Gerlach, the governor's senior policy advisor for fiscal affairs, says it had been Gov. Easley's intention all along to replace some general fund money with lottery revenue. "What the governor has said all along is that he never intended that the additional teachers needed to reduce class size and the More-at-Four program be funded through the general fund," he says. "The general money was fronted, kind of like an upfront loan." In 2002, Easley sidestepped the legislature and issued an executive order mandating expenditures for the More-at-Four and class-size reduction programs in response to Wake Superior Court Judge Howard Manning's Leandro case ruling, which required that the state provide enough money to ensure a sound basic education for all North Carolina children. Manning ordered the state to increase funding to rural and urban counties with high numbers of at-risk students after five poorer counties sued the state, saying the existing system neglected low-wealth schools. "I think it means that we have been misled about what the lottery means to education," says Chris Fitzsimon, head of the public policy organization N.C. Policy Watch and a former member of Neely's anti-lottery group. "The opponents of the lottery were correct when we said that the lottery wouldn't help education at all. It will simply replace money that's already being spent." According to the budget office's five-year forecast, $62.5 million of lottery revenues will replace general fund appropriations for More-at-Four and class-size reduction this fiscal year, increasing to $210 million in fiscal year 2006-07, $227 million in fiscal year 2007-08, $246 million in 2008-09, and $267 million in 2009-10. That's a projected total of more than $1 billion in lottery money replacing general fund expenditures over five years. "The governor had gone to the legislature each year for more money for More-at-Four and for class-size reduction before we had a lottery," says Fitzsimon. "I strongly believe that he would have done that had the lottery never been enacted." Gerlach acknowledges that the money "would have continued to be fronted out of the general fund until such time that the lottery was put in place." Gerlach says the general fund dollars the lottery revenue frees up will be put back into education programs like raising teachers' salaries, but it's impossible to predict where the money will go. Neely, a conservative, says, "It's just another source of funding for government programs." Fitzsimon, a progressive, says, "My big fear is that the money will be used for some sort of tax reduction instead of investing it back into the people of the state, including schools." "When budget writers sit down to do the budget, they aren't going to be nearly as willing to give the schools more money if the lottery is paying for education spending," Fitzsimon says. "It's true across the board in education programs. It leads the public and others to think that when we're buying lottery tickets, our schools are taken care of.""

OK..we're going to use lottery money to pay for Easley's taxpayer supported day-care program.

It will be both sad and amusing watching NC politicians fight over who gets the "Education Lottery" money. You can bet that most of it won't go to education.

2/10/2006 10:55:53 AM

If this surprises anyone I'll be surprised.

2/10/2006 2:20:27 PM

wait

you expected them to be honest about legalized gambling?

2/10/2006 2:23:29 PM

So would you prefer a tax increase?

2/10/2006 2:24:34 PM

Quote :

"If this surprises anyone I'll be surprised."

2/10/2006 2:45:19 PM

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"Patman: So would you prefer a tax increase?"

haha someone thinks lottery states have lower tax rates than non-lottery states, how cute

2/10/2006 2:47:42 PM

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"So would you prefer a tax increase?"

Yes, it would be more efficient.

2/10/2006 8:08:25 PM

BIG FUCKING SURPRISE.

2/10/2006 8:12:07 PM

So when does the lottery start anyway?

2/10/2006 8:33:55 PM

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"haha someone thinks lottery states have lower tax rates than non-lottery states, how cute"

florida has a lottery and no state income tax!!!!! PROOOOOOOF

2/10/2006 9:59:04 PM

Quote :

"florida has a lottery and no state income tax!!!!! "

Yes Florida does have low state taxes. But it's not because of the lottery. Florida depends mainly on sales and use taxes. Their massive tourism industry brings in a lot of tax money. Another example of why the FAIRTAX would benefit our country!

2/10/2006 11:56:38 PM

There website should launch on March 15th. I should know I applied for the position and they have a long way to go in a short time.

2/10/2006 11:59:17 PM

did anybody actually think that all of the money was going to go toward education?

2/12/2006 9:58:05 AM

i thoguht the excessive use of O's and exclamation points spoke to the actual tone of my statement. guess not. ill assume your fairtax statement was equally a joke.

2/12/2006 10:00:34 AM

No surprise.

Quote :

"But when the bill was amended to become part of the budget bill, that language was quietly dropped."

So was this another one of those omnibus bills that no legislator has the time to read before voting on?

2/12/2006 10:32:03 AM

Any of you lottery supporters honestly surprised by this? EVERY other state with the lottery has had a net loss of education funding by the state.

Arguing that we're losing money to Virginia and SC is silly as well. Why the hell do we want to get into a race to bottom?

2/12/2006 2:58:11 PM

not every other state. don't hyperbolize it.

2/12/2006 3:26:46 PM

Remember the gas tax

2/12/2006 3:27:49 PM

You're right. Every state with the exception of Georgia's college grants.

1 out of 39 states people.

I couldn't care less if the lottery was a privately run deal, but saying it's "for the children" is bullshit.

Here's quick primer on what I'm talking about. There's plenty more links that say the same thing. The lotteries bring in a shitload of money the first year, then the states stop funding the schools at pre-lottery levels (depending on lottery monies to make up for this), then lottery income drops after the first year or two. Net loss over time.

http://www.usatoday.com/news/opinion/editorials/2004-04-14-miller_x.htm

2/12/2006 3:37:42 PM

Pennsylvania doesn't have an education lottery. Our's funds the elderly pennsylvanians.

2/12/2006 4:25:43 PM

Quote :

"but saying it's "for the children" is bullshit."

Pretty much.

I'm still kinda excited to gamble.

2/12/2006 4:31:02 PM

Again, the gambling part doesn't bother me. The state running the gambling is more troublesome, especially when couched with this language.


Private casinos? Fine. Tax the shit out of them and be on your way.

All NC government needs now is blow and hookers and they'd have the sin sector cornered.

2/12/2006 6:21:43 PM

prude.

the lottery is bad for NC because its a regressive tax on the poor, not because its "sin"

2/12/2006 7:58:40 PM

You missed my point. I don't care about gambling at all. I just don't think that it's something the government aught to be getting their fingers in. Selling it as a boost to education is just a game.

I'm calling bullshit on the regressive tax. You have the choice to opt in or not. Yes I know that poor folks disproportionately buy lottery tickets, but noone's putting a gun to their heads to do it.

Food tax - now that's something that's regressive.

2/12/2006 8:37:31 PM

Jim Black probably wants to pass a law that says everyone has to get a complete eye exam before they can buy a lottery ticket. It's for the children.. and all that.

2/12/2006 10:17:21 PM

i love this shit. this is exactly why I told people i didn't want the "education lottery." they looked at me then and said "the legislators would never do that..." yeah, right

2/12/2006 11:36:11 PM

It shoudlnt have been started in the first place. ^ Yeah, you weren't the only one.

2/13/2006 10:22:36 AM

Quote :

"Judge to consider motion to block initial lottery spending By STEVE HARTSOE : Associated Press Writer Feb 12, 2006 : 2:41 pm ET RALEIGH, N.C. -- A Wake County judge on Monday will hear a challenge to the state lottery that, if successful, will temporarily prevent the state from spending any more money to get the games started on time. The request for a preliminary injunction is part of a lawsuit filed with the help of the North Carolina Institute for Constitutional Law, which contends lawmakers violated the state constitution last year when creating the North Carolina Education Lottery. "(Lottery efforts) would be halted, such as entering contracts and leases, until we are able to get final resolution on the law," said Robert Orr, a former state supreme court justice who heads the institute. In a motion filed with the court, Orr wrote that allowing the lottery work to continue would cause "immediate and irreparable injury" to his clients and other citizens and taxpayers. The state lottery commission has already awarded a contract to Rhode Island-based GTECH Holdings Corp. to run North Carolina's instant-ticket and lotto-style games for the next seven years. A preliminary injunction could hamper efforts to get the first scratch-off tickets sold in late March and the multistate Powerball numbers game underway in the summer. "If the law is void then any contracts entered into pursuant to that law also would be void," Orr said Friday. A spokeswoman for the North Carolina Education Lottery said Friday she wasn't sure what would happen to the startup work if the injunction is granted. "We'll do what the courts tell us to do but right now we're just doing what we were hired to do," said lottery spokeswoman Pamela Walker. "We don't have a contingency plan." The suit argues that the 61-59 state House vote approving the lottery was invalid because the bill wasn't considered on three separate days, as required by the state constitution. Gov. Mike Easley and House Speaker Jim Black, D-Mecklenburg, argue the vote was legal because lottery profits don't meet the legal definition of revenue. Bills that would generate higher sales and income taxes require three days of consideration"

Lottery profits are not revenue...classic poli-talk.

2/13/2006 10:59:28 AM

They were also claiming that the lottery wasn't a tax because it was optional. What about auto-insurance? Getting insurance isn't voluntary in this state, does that make insurance a tax? Surely the state government profits from insurance companies, all be it in a more indirect way than with the lottery. Can I claim auto-insurance like a tax on my IRS return next year?...

2/13/2006 6:15:48 PM