Feeling lucky? State legislators were when they included $5 billion in this year’s budget that’s not in pocket. That sum was supposed to be delivered from the passage of Proposition 1C, a bizarre piece of legislation attempting to beef up the State’s lottery and sell the possible profits to the futures market.
Since 1984 California has had its lottery available to all dreamers and alcoholics. Payments to winners were capped at 50% of the revenue and schools received what was left over after operating costs. Lawmakers have examined other states’ much more successful lotteries and decided that offering bigger prizes would attract more players and boost income. Interesting concept– I’ve never voted on a proposition that had a clause about funding a gambling addiction hotline, but okay.
But wait, there’s so much more. The lawmakers decided to sell future profits from the lottery tickets for a quick fix of cash to cover this year’s budget shortfall. Ah, the greenest pasture in the land, the futures market, could now gamble on California’s gambling. How can lawmakers sell such a pie? Cutting education funding out of the equation.
It’s not as bleak as all that, the education funding lost by selling the lottery to investors would be replaced by a lump sum payment from the General Fund (which is empty) and then readjusted afterwards by evaluating attendance and cost-of-living standards. Right now money that schools receive from the lottery are based on the amount of money spent on the lottery. In the future this money will be from the General Fund with a bottom baseline guarantee. Which means that in the future California may find itself in similar financial straights as right now and still owe a guarantee once floated by ticket sales.
I’m not ethically opposed to state sponsored gambling– hell, maybe the Indian casinos could help bail us out. However, I am opposed to the idea of selling futures to investors, especially when the budget analysts concede the payback would span 20-30 years and would most likely result in having to pay out from the General Fund. The same fund that also guarantees additional education funding which was once covered by lottery sales. The profits of which were sold long ago for a couple billion dollars to shore up a bad budget by lawmakers who had created a ballot measure that received advertising from a gambling machine company.
Image from the California Lottery website, unattributed.