Easley hedges on lottery funding | North Carolina | Indy Week
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Easley hedges on lottery funding 

Is it really new money?

Is Gov. Mike Easley changing his tune on the lottery? In years of campaigning to get the General Assembly to create a state lottery, the mantra among its promoters was that lottery money wouldn't be used to replace state funding, but would be in addition to it.

Now, however, the governor's office is saying something a little different.

The governor told an Associated Press reporter last week that lottery proceeds would not replace revenues already expended by the legislature.

And his spokeswoman, Sherri Johnson, told The Charlotte Observer: "Next year's budget will clearly show education funding from the general fund going up."

But critics say those aren't the same things as saying it won't replace education money that would have been appropriated by the General Assembly if there were no lottery. And lottery opponents warned all along that the General Assembly would end up using lottery money to replace General Fund money.

The issue arose after the Independent first reported Feb. 8 on a forecast prepared by the Office of State Budget and Management that shows revenue from the lottery will replace more than $1 billion in General Fund money over the next five years 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.\

According to that 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 around half the money the lottery is expected to generate.

The News & Observer picked up the issue, pointing out that Easley told legislators in his State of the State address last year, "You have fronted money [for More-at-Four and reducing class size]. From day one, I have said an education lottery should pay for these items."

Dan Gerlach, Easley's fiscal advisor, says the money being replaced by the lottery will still go toward education probably toward increasing teacher pay.

But Easley's latest promise that lottery money won't replace education spending carries little weight—language that would have made it illegal to use lottery money to supplant education funding was quietly removed from the lottery bill when it became a part of the larger budget bill. And the governor has no power over the General Assembly's education appropriations.

"You can't bind a future general assembly for how they are going to spend money," says state Rep. Deborah Ross (D-Wake), who voted for the lottery.

In addition, it's difficult to assess how much General Fund appropriations would have increased without the lottery.

"He can go into the assembly and say that lottery money is going to schools," says Elaine Mejia, a fiscal policy analyst at the N.C. Justice Center. But, 2if you want to prove that it's going to truly improve schools, it's very complicated, convoluted and difficult." \

State Auditor Les Merritt has taken on the task. He's meeting with Easley's staff to determine how much the General Assembly is spending on education so the auditor can keep track.

"We felt like if we didn't really benchmark what we're spending on education now, the year before the lottery," Merritt says, "that you would really never be able to tell what it was a few years down the road."

  • Is it really new money?

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