News that more than $200 million from the new state lottery could replace existing education spending is “not just disconcerting, it’s shocking.” That’s according to a lawmaker who voted last spring to support the lottery.
“Some of us who did — even against the rest of our party — step out and take that stand, you almost feel used,” said Rep. Carolyn Justice, R-Pender. Justice was one of seven Republicans who joined the majority of Democrats in the state House to support the lottery in April 2005.
The original lottery bill included language designed to guarantee that new proceeds would not replace existing school revenue. That same language did not appear in the state budget bill, which rewrote some lottery provisions.
Now some lawmakers are concerned some lottery money will replace existing funding sources for education, Justice said. “Certainly I would be concerned because I asked that question pointedly — more than once.”
Republicans are not alone in raising questions. A House Democrat who voted for the lottery says she’s not sure the General Assembly would go along with any plan to replace, or “supplant,” money from the state’s General Fund with new lottery proceeds.
“My question is: Would the General Assembly allow it?” asked Rep. Deborah Ross, D-Wake. Ross voted for the lottery bill last spring despite concerns about the details. Now she says she’s not sure a majority of her colleagues would support changes outlined in media reports this week.
Those reports say state budget planners have told national debt-rating agencies that $210 million in proceeds from the new state lottery would be used for the state’s More At Four pre-kindergarten program and for class-size reduction in elementary schools across the state.
The state’s General Fund pays for those programs now. Lottery proceeds would replace money from the General Fund, according to the reports.
“How does the governor propose to get there?” Ross asked. “That’s going to require action from the General Assembly. We do not have a law today that makes it so.”
Part of the issue involves a legislative numbers game, Ross said. Democrats needed help from Republicans to pass a lottery bill in the state House. They needed two GOP absences to pass the same bill in the Senate.
The latest news about the lottery could throw more lawmakers’ votes into question, Ross said. A dozen or more Democrats who voted for the lottery bill might not accept plans to supplant current education funding with lottery money. Add to that figure the nine Democrats who rejected the lottery bill in the first place, and the picture looks even less clear, Ross said.
The Senate faces similar questions.
“That’s a lot to put up in the air,” Ross said. “Would the House leadership and the Senate leadership risk ‘no’ votes on the budget because of this?”
The governor’s office has released a statement on the topic to some media outlets. “Education lottery money will supplement, not supplant existing spending for education, and I will not recommend nor sign legislation that reduces the state’s spending for education,” Gov. Mike Easley said in the prepared statement Tuesday.
“Since 2001, when we began pre-K and class size reduction efforts, I have consistently said that once an education lottery was enacted, we would use the proceeds to fund these priorities permanently,” Easley’s statement said. “The lottery will always be the source of funding for these programs in good and tough economic times. In addition, the education lottery funds college scholarships and school construction as provided by law.”
The head of the state’s largest teacher’s group says that statement offers encouragement. “One of the contingencies for our support of the lottery is the guarantee that money will be used for new programs — that education lottery money will supplement, not supplant, existing programs,” said Eddie Davis, president of the N.C. Association of Educators.
“We trust the governor’s statement,” Davis said. “It’s consistent with statements he and legislative leaders have made.”
Education groups will still monitor the budget process closely to look for any signs that lottery money is replacing existing funding, Davis said. “If there is any reduction, we’ll be blowing whistles.”
North Carolina became the last state on the East Coast to adopt a state lottery last year. In April, the House approved the lottery bill, 61-59. Seven Republicans joined 54 Democrats to support the bill, while nine Democrats joined 50 Republicans to oppose it.
Later in the summer, every Republican senator opposed the lottery bill publicly. Five Democrats also opposed the bill. That caused a stalemate until the Senate’s Democratic leaders called session in August that two Republican senators missed. Without those two senators, Democratic Lt. Gov. Beverly Perdue cast the tie-breaking vote to approve a lottery, 25-24.
Other changes in the lottery legislation bothered Rep. Justice, she said. “I said from the very beginning that if at least 50 percent of it would go toward school construction, I would vote for it, and that it not be used to supplant anything,” Justice said. “I was one of the most disappointed people when the Senate changed the school construction to 40 percent. And if it has to come back before us, I certainly wouldn’t vote for it again unless at least 50 percent was going to go to school construction. But it’s most disappointing and most disconcerting that a portion of it will be used to supplant.”
Senators made other changes in the House’s original lottery proposal. The Senate approved the House’s lottery bill with no amendments. But senators tweaked lottery provisions within the final state budget deal.
“I can assure you there will be a lot of people concerned about this,” said Sen. Charlie Albertson, D-Duplin, one of five Senate Democrats who broke ranks from their party to oppose the lottery bill. “I’ve had a lot of people tell me, ‘Well, we’re probably going to find out that this money’s going to go somewhere else. It won’t be going for its intended purposes.’”
Sen. Dan Clodfelter, D-Mecklenburg, also opposed the lottery bill. “I am convinced I voted the right way,” he said. “There’s not a state yet that has implemented a lottery that has been able to make good on any promise that it wouldn’t substitute for existing appropriations for education. And I didn’t see any evidence that we had the necessary guarantees in North Carolina to prevent that from happening. You can call me a pessimist about that, but I think I’m right to be pessimistic on this one.”
“I’m not surprised,” Clodfelter said. “I think I agreed with one point Gov. Easley made, which was that the only way to ensure that [supplanting] does not happen is either to put it in the state Constitution or some other way putting it beyond the power of the governor and the General Assembly to deal with it in the annual budget process. And we didn’t do either of those things.”
The budget language raised red flags for lawmakers such as Rep. Pricey Harrison, D-Guilford. Harrison initially cast a vote supporting the lottery bill last April, but she asked N.C. House Speaker Jim Black to allow her to change her vote. Black accepted Harrison’s request, allowing her to join eight other House Democrats who opposed the lottery bill.
Harrison realized during the House’s final debate over the state budget that the “non-supplant” language had been removed, she said. “It’s not a surprise,” she said. “It’s troubling. I got the impression from the budget provisions that would happen. I know it’s troubling for the folks back home. They don’t like the fact that the lottery was sold to us as additional funding for education and not supplanting general funding.”
The budget bill also loosened restrictions on lottery advertising. The changes almost persuaded Harrison to vote against the final budget deal, she said. “That was super troubling to me,” she said, “but I felt like there was so much else in the budget that I needed to support. I couldn’t just let that particular aspect of it make me vote against the budget.”
Most Republicans in the House and Senate voted against the lottery bill. Some say they don’t like the latest developments. “It is a concern,” said Sen. Jim Forrester, R-Gaston. “My understanding was the lottery money was going to be additional money given to the schools — to the pre-kindergarten, to reduce class sizes — not to take away or supplant money.”
“Other states have done the same thing,” he said. “That’s the reason it doesn’t surprise me. They say it’s the education lottery, and in many states the education comes out no better than before the lottery.”
Some lawmakers want to see new guarantees that lottery money will not replace existing education funds. “I think the public wants to make sure this money is going for education — for its intended purposes as they understood it,” Albertson said. “And we’ll have to work through that.”
Others would support additional changes. “I hope that can be fixed, and it isn’t used to supplant,” Justice said. “My biggest dream would be that 100 percent of the money would suddenly be converted to school construction because the one piece of it where I had the most heartburn was that any of it was being used for the early-childhood education.
“My concern all along was this, that it only be used for capital construction — onetime money,” she said. “If you started a new program, hired a bunch of teachers, and you had a bad lottery year, what are you going to do? Fire these teachers? So I was always against that piece of it. We were already disappointed we didn’t get some of the things we wanted. This just makes it worse.”
Some critics say lottery news continues to get worse. “When I walked out of the Senate chamber after they voted for it, it just felt like it was a shameful day in North Carolina’s history,” Harrison said. “It really did for me. Obviously, it hasn’t been a good thing for us so far. I’m hoping that it will end up generating the kind of revenue they’re projecting because we could use it, but I’m not particularly optimistic at this point.”
Mitch Kokai is associate editor of Carolina Journal.