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N.C. Lottery funding controversy widens

Feb 16, 2006, 8:33 am

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North Carolina Lottery

The North Carolina Lottery has not yet started, and already Gov. Mike Easley may be doing what lottery watchdogs feared would happen:  Easley is looking to replace funding on existing state programs with lottery revenues, rather than putting the new-found revenue toward new projects.

Easley's staff on Wednesday defended his plans for spending money from the new state lottery, saying the governor would not use lottery funds to replace tax money that's already going to education.
Some critics, however, say it looks like he would.

"We said it all along," said Bill Brooks, head of the Family Policy Council, which opposes the lottery. "Lotteries around the country are notorious for replacing general revenues with lottery money."

At issue is whether the Democratic governor is breaking a pledge to add lottery money — as much as $400 million a year — to the $6.6 billion the state already spends on public education.

The governor plans to use about half of the lottery money to replace $203 million in tax money that the state spends each year on Easley's two signature education programs — reducing class size and prekindergarten education.

Easley has said since he took office in 2001 that he wanted lawmakers to provide state start-up money for the education programs and that he would use lottery money for the programs once a game passed.

The House and Senate signed off on the lottery last summer, and gaming officials have progressed with plans to get the first scratch-off lottery tickets available by March 30. The game should bring in about $800 million in the first year; at least 35 percent has to go to education, under the lottery law.

In response to questions from Republican State Auditor Les Merritt about lottery spending, Easley's office recently said the governor wants to use lottery money to replace the funds that came from tax revenues — known as the General Fund.

That set off critics, including Elaine Mejia, director of the N.C. Budget and Tax Center, who said, "In all likelihood, the public was hoodwinked," according to The Associated Press. "If the governor had said this will support education programs already in place, I doubt it would have passed."

But the governor's staffers say he would still use the tax money for other education causes — such as raising N.C. teacher pay to the national average — rather than spending it elsewhere.

Easley staffers say the way to evaluate whether the governor is right is to look at the budget he proposes in the spring. If it has more money than the typical spending increase for education, they said, taxpayers will know Easley kept his promise.

"Next year's budget will clearly show education spending from the General Fund going up," said Easley spokeswoman Sherri Johnson.

Easley has also said he would push for a constitutional amendment to make sure lottery money always goes to education causes. Lawmakers won't be able to consider such legislation until they return to Raleigh in May.

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