News: CJ Exclusives

House Would Fund Teacher Raises With Lottery Money

Lower chamber's plan keeps disabled on Medicaid rolls, moves SBI

State House leaders Tuesday unveiled their $21.1 billion General Fund spending plan, including teacher pay increases averaging 5 percent, 25 new positions to enforce coal ash pond cleanup, and a transfer of the State Bureau of Investigation from the Department of Justice to the Department of Public Safety. Most state employees would get a salary increase of $1,000.

Unlike the proposed Senate budget, the House proposal would not end tenure for K-12 teachers who now have it. It would not create a separate agency to run the state’s Medicaid program, nor would it remove several thousand disabled residents from the Medicaid rolls.

Rep. Nelson Dollar, R-Wake, the House’s chief budget writer, said that $106 million of the $176.2 million in teacher pay raises would come from anticipated increased revenues from the N.C. Education Lottery resulting from an increase in the lottery’s marketing budget.

The more aggressive marketing proposal for the lottery would double the amount of money the program spends on advertising from 1 percent of total revenues to 2 percent.

Alice Garland, executive director of the N.C. Education Lottery, said House budget writers asked the lottery office to present options that would generate more revenue for the state. Garland said the change would allow the state lottery effectively to double its annual advertising budget from $17.5 million to $35 million.

“It will take a 23 percent increase in sales to make this happen,” Garland said. “It’s big numbers.”

Garland said several studies show increased advertising could bring in more revenues.

The most recent performance audit said that restricting advertising to 1 percent of sales has reduced the N.C. Education Lottery’s ability to increase revenues.

Garland said if the proposed change becomes law, North Carolinians should expect to see more advertising of instant scratch-off tickets.

“We would have money to put toward advertising the PowerBall and Mega-Millions jackpots,” Garland said. “We would have money to put toward digital advertising on web pages.”

Garland said the lottery office tries to scrutinize web pages before placing ads to avoid advertising on websites predominantly visited by children 18 years old and younger.

“We probably could afford to lease a few more billboards, which is a wonderful way to let folks know about the jackpots,” Garland said.

Jon Sanders, director of regulatory studies at the John Locke Foundation, said he doesn’t like using the lottery to pay education expenses because it takes advantage of the poorest and least-educated people in the state.

“I don’t think it’s that dependable of a source,” Sanders said. “Lottery fatigue is something that strikes other state lotteries. That’s one reason they have to up the advertising budget, and do other things that keep it fresh in people’s minds.”

Unlike the Senate budget, which offered teachers an 11 percent pay increase in return for forfeiting their tenure rights, the House teacher pay increase comes with no strings attached. Instead, the House would seek to eliminate teacher tenure through attrition.

“Moving forward, new teachers would not have tenure, but those who currently have tenure would have that grandfathered,” Dollar said.

Anna Roberts, a spokeswoman for House Speaker Thom Tillis, R-Mecklenburg, said tenured teachers who take new jobs but stay in the same school district would retain tenure. However, any teacher moving from one school district to another would forfeit tenure at the new job.

Tillis set an ambitious goal completing the House’s work on the budget this week, with a conference committee negotiating and producing a compromise budget next week.

Other provisions include:

• Transferring the SBI from the Department of Justice to the Department of Public Safety, a provision included in the Senate budget but opposed by Attorney General Roy Cooper. In addition, the state ABC Commission would be moved from the Commerce Department to the Department of Public Safety.

• Adding 25 positions in the Department of Environment and Natural Resources to oversee coal ash management and clean up, at a cost of $1.8 million.

• Providing a 1.44 percent cost-of-living adjustment to state retirees.

• Appropriating $2.5 million to the One North Carolina business incentives fund, as well as $3.6 million to the N.C. Biotechnology Center, and $2.3 million to the Rural Economic Division. The budget provides no funds or tax breaks for film incentives, which are set to expire at the end of this year. The Senate has adopted a separate incentive plan, based on grants, for the film industry.

The House budget does not address reforming the state’s Medicaid program. Dollar said Medicaid reform would be handled in separate legislation.

The House’s $21.1 billion General Fund budget is a 2.3 percent increase above the current fiscal year $20.6 billion budget. The Senate proposed a $21.2 billion budget. Gov. Pat McCrory’s proposed budget is $21 billion.

Barry Smith (@Barry_Smith) is an associate editor of Carolina Journal.