Wednesday, December 17, 2008

LG Halter: Lottery Needed Urgently Due To "Softening of the Economy"; Beebe Finds the Plan "Troubling" (UPDATE)

Lieutenant Governor Bill Halter released his lottery proposal today outlining nine principles that he feels are the important ingredients of the Arkansas lottery. Halter says that he expects that the lottery will take in appropriately $400 million in revenue to provide around $100 million in scholarships. If my math is correct, then that means $300 million will be wasted on payouts, expense, and increased bureaucracy. Halter said, “The scholarship lottery will provide new hope and new opportunities for current and future generations of Arkansans to receive the highest quality college education right here in their home state, then put that knowledge to work to achieve their God-given potential.” Ironic how some politicians tend to involve God whenever it helps their case, but I confess this is the first time I have seen God used by a politician to support a lottery proposal.

The press release includes the praises of several state legislators including, Rep. Steve Harrelson, who says he is “excited about these ideas,” Sen. Jimmy Jeffress, who is “in complete agreement,” Rep. Billy Gaskill, who “supports every single one of” the principles, as well as Sen. Jim Luker, Rep. Otis Davis, and Sen. Steve Bryles. Noticeably absent from the press release are the current sponsor of the lottery legislation - HB1002 - House Speaker Robbie Wills and cosponsors Rep. Bruce Maloch and Rep. Gregg Reep. Rep. Wills has tremendous influence over the lottery legislation. As house speaker, he can control which house committee will consider the bill and conventional wisdom says it will be the House Rules Committee, which normally handle bills related to gambling and is made up of representatives appointed by Speaker Wills. In addition, as primary sponsor, he controls what amendments will get attached to the bill.

Halter’s principles one through four deal largely with the scholarship standards while principles five through nine deal with the administration of the lottery. Halter’s plan is for the HOPE scholarships to be based on academic achievement primarily determined by the student’s high school grade point average. The GPA threshold will depend on the level of lottery funds available. Halter’s plan also calls for the scholarship not to be award based on “race, gender, age, income or chosen field of study.” The key point here is that the scholarships will not be need-based scholarships. So congratulations to the middle class and wealthy parents in Arkansas; you now get to have your children’s tuition paid for by those who can least afford it! Halter’s plan also says that the application process should be simple, taking 30 seconds or less to understand, ideally with a single online application. He also insists that the scholarship be available not only to traditional students but non-traditional students as well.

As to the administration of the lottery itself, Halter holds that the funds generated must be “net new resources” and “should supplement, not supplant, existing non-lottery education resources” and that the entire state funded scholarship program needs to be restructured. In addition, Halter contends that the best-run state lotteries are those, which have state-owned corporations governed by an independent board of directors, as this is “the best way to blend businesslike efficiency with government ownership.” In addition, an “experienced Lottery Director with a proven record of success” should be hired and the lottery corporation should be given “competitive flexibility in allocating gross lottery sales revenue across prizes, operating expenses and net proceeds.” Of course, the corporation will be required to submit quarterly and annual reports for public review and should be subject to the Arkansas Freedom of Information Act. Also, the lottery “should be evaluated biennially.” However, it is interesting to me that this evaluation is to determine how effective the lottery is at paying for scholarship and does not include an impact of the lottery itself on the state economy. I guess Halter does not care if the lottery cripples our economy as long as we can all send our children to college at a cheaper price.

Halter concludes by stressing the “sense of urgency” to implement the lottery quickly. He points out that for every day that the lottery is delayed, $270,000 scholarships are lost. I would like to note here that this also means over $1 million a day will stay in Arkansans pockets instead of being handed over to the state. He hopes that the first scholarship can be awarded for the 2009-2010 academic year with the first ticket sales beginning no later than January 2010. Part of the reason for this urgency is “the recent softening of the economy and the plunge in stock and real estate values.” I guess in Halter’s view the lottery is just the boost our state economy needs.

UPDATE – It seems I am not the only one who has some issues with Bill Halter’s lottery plan; according to the Arkansas News Bureau, Gov. Mike Beebe does as well.

The governor’s spokesman Matt DeCample said yesterday, “While the governor respects the work that the lieutenant governor has done regarding the lottery, there is a lot in his proposal that we do not agree with.” Beebe takes issue with the way in which Halter wants to restructure the state-funded scholarship programs as well as Halter’s plan to start awarding scholarships before lottery revenues actually begin. DeCample stated, “One piece that is especially troubling to the governor is the idea of using existing surpluses to begin new scholarship programs before there is any actual revenue from the lottery.”

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