From AP RALEIGH, N.C. – During her campaign for governor, Beverly Perdue often said she wanted take extra steps to ensure profits from the North Carolina Education Lottery were spent solely on education.
She was worried lawmakers might tap the ready source of cash for something else. And less than two months in office, faced with a brutal economy that’s sapping the state of revenue, both lottery critics and allies say she’s become the prime example of her own fears.
Perdue said last week she would use $87.6 million in lottery profits to ensure there’s money available in the state’s day-to-day operating accounts to pay the bills through mid-April. Lawmakers who voted for the lottery law say they’re frustrated by the decision, even though they know she made it to face the state’s worst fiscal emergency in a generation.
“The commitment that I told the people was that this was an education lottery and it would never be used for (something else)”, said Rep. Bruce Goforth, D-Buncombe. “I didn’t know that we’d have the circumstance that we have now.”
The lottery money was part of the $300 million Perdue shifted from four dedicated accounts to help close a $2.2 billion gap in the state budget caused by dwindling sales and income tax receipts. Her decision didn’t surprise those who have long said requiring the lottery to benefit education was merely a statutory facade.
“This isn’t so much an ‘I told you so’ moment as a ‘no kidding,”‘ said John Hood, president of the conservative-leaning John Locke Foundation and a lottery opponent. “The lottery was truly sold as an un-tappable pot. You weren’t supposed to use this money for another purpose.”
The new governor defends the transfers as a precautionary move but said she couldn’t guarantee the money would be returned “if things continue to go downward.” Perdue argued the lottery money would still be used for its intended purpose, since more than half of the state’s $21.4 billion budget is dedicated to public education.
“That was a pot of money sitting there,” Perdue said this week. “It’s my constitutional responsibility to balance the budget and pay the bills, and I’m going to do that.”
By law, roughly 35 percent of lottery ticket sales revenue is designated for education programs: class-size reduction, prekindergarten programs, college scholarships and school construction. Perdue said “there is not one single project that isn’t going to be built” as a result of her decision to tap $37.6 million in lottery construction money and $50 million more in a lottery reserve fund.
But it means some school districts and county managers are scrambling to find money to make debt payments on building projects. In Beaufort County, officials are looking for spending cuts to make up for $183,000 that was expected from the lottery last month to help pay down $33 million in school construction bonds.
“We are very concerned about the ramifications that it will have on an ongoing basis … as the lottery money was to be pledged for school construction,” said Jim Chrisman, assistant Beaufort County manager.
Concern about changes to the lottery law led Perdue to propose “a constitutional amendment to make sure that lottery funds stay dedicated to education,” as she wrote in a March 2008 candidate questionnaire from The Associated Press. She later reaffirmed her intentions in an interview.
Perdue said this week she’s still committed to such an amendment, which would have to be approved by voters. But she believes it wouldn’t limit how the money is used during a fiscal emergency, as it would be trumped by the constitutional requirement to balance the state’s budget.
Lawmakers could try to write an amendment barring the governor from tapping into the funds, even to narrow a budget shortfall. That would likely move the debate into the courts.
In 2005, an appeals court ruled then-Gov. Mike Easley was within his rights to withhold $210 million in expected tax reimbursement to local governments to narrow a 2001 shortfall. But the state Court of Appeals ruled last summer Easley was wrong to intercept $225 million headed to North Carolina state employee pension funds.
House Majority Leader Hugh Holliman, D-Davidson, who voted for the lottery, said the constitutional amendment is “problematic.” He said the Legislature must do its best to protect the current funding formula for education, but isn’t surprised by Perdue’s decision.
“I understand the pressure that the governor is under,” Holliman said. “I’d have to tell you, if I were governor I’d probably do the same thing.”
March 9th, 2009 at 10:44 pm
North Carolina, normally associated with the Bible Belt, was the only state on the East Coast without a lottery. The issue divided lawmakers and the public alike. At the time, the opposition of nearly every Republican and a small minority of Democratic lawmakers (those of the progressive faction)[3] made the passage of a lottery unlikely. These groups denounced the lottery as a regressive tax on the poor.[3] However, on August 30, 2005, two lottery opponents (Harry Brown, R-Jacksonville and John Garwood, R-North Wilkesboro) had excused absences. With this known, a special vote was called and the vote tied 24-24. Then Lieutenant Governor Beverly Perdue cast the tiebreaking vote, signaling the way for Governor Easley to sign it into law. The vote would have been defeated had the absent senators paired their votes.
[edit]Proceeds and Payouts
Seven percent is paid to retailers as commission.
Fifty percent is paid as winnings to lottery players. (See note below on scratch tickets.)
Eight percent is cost-of-sales.
The remaining 35% goes to education proceeds, broken down as follows:
Before any proceeds are paid, 5% of the proceeds (1.75% of the total) goes to the Education Lottery Reserve Fund to be used when lottery proceeds fall short of the goal. This fund may not exceed US $100 million.
Fifty percent of the remainder of the education proceeds (16.625% of the total) goes towards the reduction of class sizes.
Forty percent of the remainder of the education proceeds (13.3% of the total) is used for school construction.
Sixty-five percent of this total (8.645% of the total) is distributed based on school enrollment.
The remaining 35% (4.655% of the total) is distributed to counties with effective county property tax rates above the state average based on school enrollment.
Ten percent of the remainder of the education proceeds (3.325% of the total) are distributed for college scholarships, to be used with the federal Pell Grant.
Originally, North Carolina’s scratch tickets had an overall payout of 52 percent, the lowest among scratch tickets then available through US lotteries. While its $1 instant tickets continue to pay out at roughly this level, its newer $2 and higher games now have higher payouts.
March 9th, 2009 at 10:55 pm
I’m so freakin mad! It isn’t enough Big Wig OBAMA is stealing from our future,she gotta jump on the wagon too! This is an outrage when there is still so many issues in our schools today.
Our children are dropping out like mad,because of poor structure and understaffing in the school system. Teachers are spending out nof their own pockets still! Kids are still being ask to do fundraising for school extras like graded field trips???!!! I teachers and students need to strike until this wacko is out of office!
March 9th, 2009 at 11:31 pm
Maybe we alll can understand -
Once the seal is broken it’s hard to keep theives out.
Notice I said broken not un-locked.
Let’s define BROKEN-separate or cause to separate into pieces
Make or become inoperative
Open forcibly
Use (a piece of paper currency) to pay for something and receive change out of the transaction
Exchange (a piece of paper currency of large denomination) for the same amount in smaller denominations
Unfurl
Succeed in deciphering
Disprove
Invalidate (a will) through legal process. Interrupt (a continuity, sequence, or course) : the new government broke the pattern of growth
Put an end to
Stop proceedings in order to have
Disconnect or interrupt
Fail to observe (a law, regulation, or agreement)
None of these sound very pleasent for our children do they?
March 9th, 2009 at 11:39 pm
Define unlocked – Undo the lock of (something) by using a KEY.
May 6th, 2009 at 11:58 am
They need to enact a “non-supplant” clause in order to keep funds from going to other things. With a Non-supplant clause, the money HAS to go to education alone.
What bothers me is that instead of pulling funds from welfare programs she takes from lottery and state workers. She takes from the $$ allotted for education, then takes from the teachers pockets to pay the bills for welfare programs.
What a joke!
June 2nd, 2009 at 4:05 pm
I’m so glad I stumbled on this website. I have just this week written Gov. Perdue asking for accountability of all money that has been paid into the NC lottery for educational funds. I was unaware that the funds had already been taken out for “other” purposes. Needless to say I have not yet heard back from Gov. Perdue. I would recommend every voter in North Carolina write Gov. Perdue and demand her accountability for the funds, and I mean a “breakdown” of “every dollar, and demand that it be paid back to the education system. It is a pure shame our educators and childern are the ones who are suffering because of such inefficient government. Please don’t be afraid to voice your opinion. So many voters will just sit back and hope it will work itself out, but in “today’s world” that will not happen-there are too many greedy politicans out there just in it for “themself”.
Help save our children, demand that our elected officials do the right thing or let them know we will “vote them out of office” including impeachment.