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Wednesday, May 24, 2006

First the toll road, next the lottery? Is nothing sacred? [Updated]

The Chicago Tribune reports today:

Democratic Gov. Rod Blagojevich on Tuesday proposed selling or leasing the state lottery to fund school reforms, a plan Republicans said would squander a dependable source of cash just to boost his re-election campaign.

Blagojevich's proposal, which would have to be approved by the legislature in the fall, counts on a $10 billion windfall from shedding the three-decade-old Illinois Lottery.

Some $4 billion of that would be spent over the next four years for classroom programs, school construction, expanded preschool and full-day kindergarten, merit pay for teachers and new textbooks. That money would also be used to help failing students and schools.

Another $6 billion would be invested. The income from those investments would bring in $650 million each year through 2024, making up for the loss of the money the lottery now brings in for schools, Blagojevich said.

"Gov's $10 billion jackpot for schools" is the headline to the Sun-Times coverage. Some quotes:
[Q]uestions were immediately raised about the wisdom of leasing the lottery, and whether the plan truly solved a decades-old problem of inadequate state funding for schools.

A sale or lease could generate $10 billion. But only $4 billion of that would amount to new dollars for schools -- and that money would be gone after four years. The other $6 billion would go into a trust expected to generate about $650 million annually through 2025 to replace the money schools get from the lottery now.

In addition, the governor hopes to pump in another $2 billion from other sources over the four years for a total of $6 billion in new funding.

"What happens after year four?" said Bindu Batchu of A+ Illinois, a school finance reform group. "We need to sustain an investment in education. We can't rely on one- time sources."

Dawn Clark Netsch, the 1994 Democratic gubernatorial candidate who made school finance reform her campaign centerpiece, was leery of giving up valuable state assets.

"I'm concerned about this idea that we're going to sell or lease most of our major state assets," Netsch said. "It seems we're continuing to push the responsibility for funding our services off into the future and taking away assets we may need in the future."

[Updated almost immediately] Patrick Guinane of the Munster (NW Indiana) Times reports today:
In Indiana, Daniels has considered privatizing the Hoosier Lottery and even mentioned the idea to The Times editorial board earlier this year.

The concept does not, however, appear to be near the top of his agenda.

Daniels was headed to Washington, D.C., Tuesday to testify this morning about his pending privatization of the Toll Road and was unavailable to comment on the Blagojevich plan.

"Gov. Daniels is always looking for innovative ways to deliver public services while keeping taxes down," said spokeswoman Jane Jankowski. "We have looked at this idea but do not have plans to pursue it for the present time."

After expenses, including prizes, advertising and vendor payments, the Hoosier Lottery generates nearly $200 million a year, or less than a third of annual bounty Illinois schools see from that state's lottery. The Hoosier Lottery, which includes all scratch-off games, turned a profit of $189 million last year, down from $199 million the previous year.

State Sen. Vic Heinold, R-Kouts, said he doesn't see how a Hoosier Lottery could bring a bring a benefit anywhere near the 'home run" Daniels delivered on the Toll Road lease.

"I'd sure have to see the number," he said. "If it's just a quick fix, I don't see it happening."

Heinold said no one from the administration has briefed Senate Republicans on lottery privatization, so it's unlikely such a plan is percolating.

Democrats, who overwhelmingly opposed the Toll Road lease, bristled at auctioning the Hoosier Lottery.

"Basically, I'm opposed to any privatization because you have to understand that people are getting in it to make money," said State Rep. Vernon Smith, D-Gary. Private operators often seek profits by cutting services or gouging customers, he said.

State Sen. Karen Tallian, D-Ogden Dunes, said privatization is no more palatable coming from Blagojevich, a fellow Democrat.

"It's like mortgaging your house to go to the grocery store," she said. "You need to come up with a solution that will continually finance education needs. The whole thing is a silly idea. The Toll Road (lease) was a silly idea. All that money is going to be gone and we're still going to have transportation needs."

Daniels argues that building new roads now will attract employers and bolster Indiana's economic future. Lawmakers did put $500 million in a trust fund to generate investment income for transportation spending beyond 2016.

Blagojevich wants to spend $4 billion from an Illinois Lottery auction over the next four years and use the remaining $6 billion to provide schools an annual annuity of $650 million through 2025.

Posted by Marcia Oddi on May 24, 2006 08:58 AM
Posted to General News