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N.C. lottery revenues redirected away from education

Feb 27, 2009, 9:36 am

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North Carolina Lottery

Lottery opponents warned it would happen; they were right

State lawmakers voiced concern today over a transfer of proceeds from lottery-ticket sales from school construction to the state's general fund.

Gov. Bev Perdue's office also clarified details of the transfer today, a day after school systems learned they would lose this quarter's state funding for school construction.

Perdue's office said today that the funding being withheld, $37 million from lottery profits and $5 million from corporate income taxes, is part of money being moved from special accounts to hold in waiting in case the general fund runs out of cash.

Perdue ordered $100 million moved from the school building fund, but most of that has already been spent by school systems, leaving only $42 million of this quarter's payouts to hold back. The governor moved another $200 million from other sources, including by depleting the lottery's reserve fund.

"This money will be placed in reserve and only spent if necessary," said Chrissy Pearson, spokeswoman for the Democratic governor.

The governor's office said the transfer would not affect existing projects, but is making no promises to return it if it goes unused.

Legislators said that when they approved a state lottery in a contentious vote in 2006, they intended it to raise money solely for education.

"I know it's tough times," said Rep. Bruce Goforth, an Asheville Democrat, "but we made a commitment when we started the lottery."

Sen. Tom Apodaca, a Hendersonville Republican, described it as a moment of "I told you so" for lottery opponents who argued at its creation that it would end up being used for purposes other than education.

"We were always scared of that," he said.

It remains unclear whether a group of school districts concentrated in Western North Carolina will receive extra funding this year, as the legislature approved last year to make up for a perceived unfairness in the lottery distribution formula.

Rep. Ray Rapp, D-Madison, predicted that Perdue's decision makes it unlikely the districts will see the money they are due in June. Perdue's office said the order affects only payouts from January through March.

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