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Even with revenue deal, start of N.C. lottery no sure bet

Aug 9, 2005, 8:37 am

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North Carolina Lottery

House and Senate Democrats have agreed how to distribute lottery proceeds, but it's hardly a sure bet that North Carolina will become the last state on the East Coast to run a numbers game this year.

The agreement, details of which were released late Monday with the final proposed $17.2 billion state budget for the coming year, includes a looser advertising policy than one approved by the House in April.

Even if both chambers approve the budget later this week, the lottery language won't enact the game itself, according to budget negotiators. The Senate still would have to approve the House's standalone bill to allow the state to begin offering scratch cards and lotto games.

Five Senate Democrats have publicly opposed a lottery. Unless some of the 21 Republicans vote yes, there wouldn't be enough votes to pass the standalone lottery bill in the 50-seat Senate.

The five "have not changed their mind," said Sen. Janet Cowell, D-Wake, one of the five Democrats who has serious reservations. Lottery support remains "very fragile," she added.

Senate Majority Leader Tony Rand, D-Cumberland, a lottery supporter, predicted the standalone bill also could be voted on this week, but was coy about exactly when.

When asked if the lottery had the votes for passage, Rand responded: "You'll see when we vote. It'll be up on the (voting tally) board. But we think so. We wouldn't bring it up unless we thought we did."

The House and Senate each scheduled the first of two required votes on the proposed two-year budget late Tuesday.

The budget proposal eliminates some of the most high-profile cuts and cost-saving measures found in the House and Senate proposals.

Gone from the compromise is a $53 million reduction proposed by the Senate by moving 57,000 patients from dual Medicaid-Medicare coverage to Medicare only. But 8,000 also would have been without any medical coverage.

A $47 million reduction in money earmarked for local districts to hire teacher assistant was removed. Negotiators also removed House provisions that would have eliminated 500 seventh-grade and vocational education teachers.

Rand said it's possible that the Legislature could adjourn for the year as soon as this weekend. But House Speaker Jim Black, D-Mecklenburg, said "that would be pretty tough."

The lottery language inside the budget determines how net proceeds from a lottery _ projected to generate $400 million to $450 million annually _ would be distributed.

Fifty percent of the remaining revenues would go toward class-size reduction and More at Four pre-kindergarten initiatives pushed by Gov. Mike Easley, who has sought an education lottery since taking office in 2001.

Forty percent would be used for public school construction and the remaining 10 percent would go to college scholarships, according to legislative officials. Before any profits would be doled out, 5 percent of revenues would be placed in reserve.

An advertising ban in the House bill also would be eliminated, replaced instead with restrictions on how games could be marketed to North Carolina residents.

North Carolina's lottery commission could spend no more than 1 percent of annual gross revenues on commercials, billboards and other advertising. No ads could be targeted at minors or other groups, and ads must "include resources for responsible gaming," according to Senate Democrats. The commission also would have to spend $1 million annually for treatment of gambling addiction and treatment.

Rand said permitting advertising would make it easier for North Carolina to participate in multistate lottery games with big jackpots such as Powerball.

House Democrats, who have 63-57 advantage, also will have to decide whether they can support a budget that restricts but doesn't eliminate advertising. Black said he expects to have enough Democrats to pass the lottery changes within the budget, saying that the advertising restrictions may be the toughest in the nation.

"There are so many good things in the budget that we'll be able to pass one," he said.

On the budget, lawmakers managed to restore several education cuts in the budget by setting aside an additional $102.5 million in this year's budget for the public schools. They found the money after a state Supreme Court ruling last month expanded the list of civil penalties that the justices said should be funneled to the public schools.

Negotiators also signed off on spending millions of dollars scores of special projects, many sought by rank-and-file lawmakers for their districts back home.

Legislative leaders handled most of these items last year through discretionary pots of money they slipped into the budget. Black, Basnight and then-Co-Speaker Richard Morgan, R-Moore, essentially decided later which projects would receive money, after requests from members.

Black and Basnight said this year they would itemize the projects, which cover several pages in their budget report.

As expected, the 364-page text of the budget bill contained more than $600 million in new or extended taxes this year, including a 25-cent increase in the cigarette tax, now the lowest in the nation at 5 cents per pack.

A half-cent increase in the sales tax and an 8.25 percent income tax rate for the top wage earners also would stay in effect for another two years.

There's also higher driver's license and title fees, and higher taxes on candy, liquor and satellite television.

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