NC lottery projections: who knew what – and when they knew it

June 19, 2014 

Secrecy trumped openness for about a week on some details behind the state House budget’s plan for increased lottery profits to finance teacher pay raises.

The House budget outlines that more money for teacher raises, which would average about 5 percent, would be available from the lottery as a result of lifting a cap on advertising to pump up sales – and profits.

But lottery officials said publicly for the first time Wednesday that they do not believe that target can be met. Here’s how it unfolded:

June 4

• House budget writers meet with lottery officials to hear about options for raising more lottery money to provide more funding for education. On a menu of choices, lottery officials say increasing advertising by 1 percentage point, to 2 percent of sales, would result in about $105.5 million more for education.

June 10

• House leaders announce their budget plan, which lifts a 1 percent cap on advertising spending to 2 percent to allocate $106 million of additional lottery money for teacher pay raises. A provision also restricts the lottery advertising and requires more information about odds and payouts. State Rep. Nelson Dollar, a Wake County Republican and a key budget writer, responding to a question about whether the goal can be met, says: “We are very confident, the lottery’s very confident, that they will more than meet the goal. Next question.”

• Garland speaks privately with Dollar about concerns, telling him that the budget target couldn’t be met because of restrictions written into the budget. (Dollar recalls that the conversation took place on June 11, not June 10 as Garland says.) Garland does not express concern in several media interviews.

• At midday, legislative staffers write to lottery officials seeking input on how the restrictions would impact the budget.

June 11

• Lottery officials provide reports in the morning to legislative fiscal analysts and key legislative staffers that outline concern: They do not believe the $106 million target can be met. Their review determined the lottery could bring in only about $59 million more due to the restrictions – a shortfall of about $47 million from what the House budget proposes.

• Garland attends a House committee meeting where the budget is discussed, but she is not questioned.

• The News & Observer interviews Garland in the afternoon. She says the House target of $106 million does not account for the ad restrictions now written into the budget. Asked if the lottery would have difficulty meeting the $106 million target and to what degree, she says the lottery has not projected that out. “We haven’t run through that number,” Garland says, falsely.

June 12

• The N&O requests from the lottery documents related to lottery forecasts and projections.

Friday

• House Speaker Thom Tillis’ staff lawyer, Ray Starling, writes to the lottery’s general counsel about the public records request, raising concern about legislative immunity and privilege, and requests further discussion before documents are released.

• Lottery officials do not release the documents, citing Starling.

• The House passes the budget with the lottery restrictions and forecast unchanged.

Saturday

• The N&O reports the lottery is likely to miss the $106 million target, citing a fiscal memo the newspaper obtained. Dollar does not say whether he saw the projection before the House voted on the budget.

Tuesday

• The state attorney general’s office says in an email message to the lottery that the financial information sought by the media is not confidential and can be released. The lottery gives Tillis’ office time to raise any other objections.

Wednesday

• Garland speaks to a Senate committee about the lottery projections and provides documents, detailing publicly that the lottery forecasts a $47 million shortfall if ad restrictions and other provisions are kept in place.

• State legislative and executive budget officials say they are meeting to develop a consensus forecast on the lottery projections, hopefully by Friday.

• Garland says she was not forthcoming about the lottery’s concerns earlier “because I had been told that it was confidential information – that it came under legislative confidentiality.”

“I was trying to honor what I had been asked to do,” Garland says, which was “to not talk about it.” She says Dollar is the one who asked her to remain silent.

• Dollar says that he does not recall giving any direction to Garland. “I didn’t say anything to her about that,” Dollar says. “She expressed a concern, but I didn’t have anything in writing about that.”

Staff writer Andrew J. Curliss

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