Lottery prizes pushed in budget

Easley wants bigger payouts. Legislators want the lottery to still be able to fund education programs

Staff WriterJuly 26, 2007 

Gov. Mike Easley has not given up on tinkering with the formula for distributing lottery revenue, despite getting a cold shoulder from legislative leaders for much of the session.

Easley is seeking language in the state budget that would give lottery officials greater flexibility in offering bigger prizes to scratch-off ticket winners. The idea is that bigger prizes dramatically increase ticket sales, which means more money for the education programs the lottery is supposed to pay for.

Easley's press office would release only a short statement about his lottery efforts, saying that the governor "wants to make sure there are the resources necessary for a quality education for all North Carolina's children." His senior aide, Dan Gerlach, who has served as his legislative liaison during budget negotiations, declined to talk about it.

Legislative leaders say they are not averse to increasing the prize money offered, so long as it does not reduce the money for education programs.

"I think there is a good chance that we would add language that would increase the prizes," said Rep. Jim Crawford, a chief budget writer and an Oxford Democrat.

But devoting more money to prizes could mean -- at least initially -- reducing the percentage of money for education programs. The lottery law says that 35 percent of revenue goes to several education programs. Two are Easley's signature initiatives, the More at Four pre-kindergarten program and reduced class sizes for elementary schools. Lawmakers also devoted lottery proceeds to school construction and college scholarships.

Easley rolled out his proposal early this year after forecasts showed that the lottery would bring in far less than expected in its first year. He said that if the percentage of lottery revenue devoted to prizes was increased from the current 52 percent to 59 percent, ticket sales would jump dramatically.

He predicted that the plan could increase lottery revenue by 50 percent. Other states have increased their prize money and seen strong gains in revenue, but not at the level Easley predicts.

This week, lottery officials said sales reached $890 million for the previous fiscal year, about 25 percent less than the $1.2 billion they had projected for the lottery's first full year. Legislative leaders say they are likely to use general fund money to fully fund the education programs the lottery was supposed to cover.

Easley has also wanted to reduce funding for construction and scholarships and increase funding for More at Four. But legislative leaders say they have no interest in changing the distribution of education money.

Senate Majority Leader Tony Rand, a Fayetteville Democrat, said he does not think Easley would veto the budget if it did not include his lottery proposal. But it continues to be discussed as Easley, Senate and House leaders try to resolve their differences. Other areas that have protracted budget negotiations include a proposal to let counties hold a referendum on a 0.4 percent land transfer tax and money for cancer research.

Senate leader Marc Basnight, a Manteo Democrat, said legislative leaders are close to resolving differences, but he said it is likely lawmakers and Easley will have to pass another stopgap spending bill to keep government running past July 31, when the current, one-month temporary spending resolution expires. The fiscal year began July 1.

Staff writer Dan Kane can be reached at 829-4861 or dan.kane@newsobserver.com.

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