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N.M. Lottery chief wants to scrap earmark for education

Oct 3, 2016, 7:49 am

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New Mexico Lottery

The head of the New Mexico Lottery says his organization could provide more money for students if the Legislature scrapped a requirement pledging 30 percent of ticket sales to college scholarships.

David Barden, chief executive officer of the lottery, said eliminating the requirement would allow for larger cash prizes and higher-priced lottery tickets, such as a $20 model. In the long run, Barden said, that change would pay off with more money from the lottery going to the college scholarship program.

As it is, the state has lost nearly $50 million in sales to border states during the past eight years, he told the Legislative Finance Committee on Thursday.

Though Barden said earmarking 30 percent of ticket sales sales for scholarships is working against the state providing more money for scholarships, one recent statistic contradicts him. The lottery paid a record $46.3 million for scholarships in the last budget year.

But Barden still said ticket sales have hit a plateau.

"We're at a stopping point [for growth]," he said. "I can't push it any further."

Fred Nathan, head of the public policy organization Think New Mexico, doesn't accept Barden's position.

"The fact that the lottery's revenues grew by more than $17 million this past year (an increase of nearly 13 percent) contradicts the lottery administration's claim that the lottery's growth is being hindered by the requirement to deliver at least 30 percent of revenues to scholarships," Nathan said in an email Thursday. "At a time when the lottery scholarship program is already struggling to keep up with growing demand [for scholarships], it makes no sense to repeal the 30 percent requirement and reduce the amount of lottery revenues going to scholarships."

Legislators created the scholarship fund in 1996. Its sustainability has been a concern for years because higher tuition and rising college enrollment began to outpace lottery revenue. Though scholarship money leveled at $40 million annually in recent years, the demand for scholarships rose to about $65 million a year.

The lottery scholarship used to cover 100 percent of tuition for in-state students who met eligibility requirements. But legislators reduced the amount to 95 percent of tuition in the 2014-15 school year and then to 90 percent in 2015-16. It would have dropped even lower if lawmakers had not decided to draw on the state's general fund and alcohol excise tax revenues to supplement the scholarship fund.

The liquor excise tax contribution just ended, and that could weaken the scholarship fund.

Lottery staff members have pushed initiatives to increase ticket sales, including a pilot pay-at-the-pump program that began in July at several gas stations around the state.

Barden said players are more likely to make a lottery ticket purchase at the pump. He cited a report that says 64 percent of convenience store-gas station customers never enter the store.

"You have no chance to throw a lottery product" at those customers, he said, urging lawmakers to support the pay-at-the-pump ticket program.

For the most part, committee members were silent on the subject, though Sen. John Arthur Smith, D-Deming, pointed out that the entire state has to change the way it does business or continue to stagnate. And Sen. George Muñoz, D-Gallup, agreed with Barden that more and more people are turning to their iPhones and debit cards to make purchases.

During the past few years, lawmakers and special-interest groups have unsuccessfully pushed bills to either decrease or increase the lottery's contribution to the scholarship fund. Lottery executives got behind a bill in the last legislative session to repeal the 30 percent contribution requirement and replace it with a flat $41 million a year. It ultimately failed.

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