ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, January 18, 1996 TAG: 9601180077
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: WARREN FISKE STAFF WRITER RICHMOND
Facing stiff opposition from anti-gambling groups, the Allen administration on Wednesday backed away from a proposal to bring two lottery games to Virginia next year.
State Lottery Director Penelope Kyle told a Senate money committee that she will stop plans to bring Powerball and keno to Virginia unless she receives authorization from the General Assembly.
"I considered my top job at the lottery was to generate additional revenues, and that's what I have tried to do," Kyle said. "I never intended to generate the kind of concern these games have produced."
On the recommendation of Kyle and the state Lottery Board, Allen last month proposed a state budget that was balanced, in part, by a projected $67.3 million per year in revenues created by the two games.
Loss of those funds leaves a gap in the proposed $34.6 billion biennial budget.
Kyle's testimony was not the only indication that Allen's spending plan - and the revenue on which it is based - may face substantial revision at legislative hands.
House Appropriations Committee Democrats grilled an assistant to Attorney General Jim Gilmore on the proposed Trigon/Blue Cross-Blue Shield settlement that Allen expects to supply $95 million for higher education.
"The Constitution clearly places the authority for deciding the priorities of the commonwealth on the legislative body," said Del. Clifton "Chip" Woodrum, D-Roanoke, arguing that it's not up to Gilmore and Allen to decide how the $159 million Trigon settlement will be spent.
After Allen unveiled the proposal last month to bring Powerball and keno to Virginia, there were howls of protest from Democratic and Republican legislators. Critics said the games would bring a more serious and potentially addictive form of gambling to the state lottery.
Powerball is similar to Virginia's Lotto game, but would be played in cooperation with several other states and have bigger jackpots. Keno also is similar to Lotto, but it uses video monitors that report winners as often as every five minutes. Critics say it is closer to casino-style gambling because most payouts would be instant.
Until Wednesday, it was uncertain whether the General Assembly could stop the games. That's because the Lottery Board is an independent agency that can authorize games without seeking approval from the legislature or the governor.
A number of lawmakers, upset by the developments, planned last fall to introduce bills that would bar the board from starting up keno or Powerball. Kyle promised legislators that she would suspend all efforts to bring the games to Virginia until the legislation is voted on and that she would be guided by the results.
Kyle, who was hired two years ago by Allen, said she had not consulted with the governor about her decision.
Allen has sought to distance himself from the games ever since he included them in the state budget he proposed last month. Ken Stroupe, a spokesman for the governor, said Allen had no choice but to accept the Lottery Board's recommendation for keno and Powerball.
Stroupe said Allen never specifically backed the games and would be happy to let the General Assembly decide their fate.
But a number of Democrats questioned that explanation. "It seems pretty apparent that the governor is smelling defeat and backing off," said Del. Kenneth Melvin, D-Portsmouth.
Among the most vocal opponents of the games is Del. Randy Forbes, R-Chesapeake, who is drafting a bill to ban them. "I've felt for some time that the social costs of these games are far greater than the revenues they would produce," said Forbes, a close ally of Allen's.
Forbes and others predicted that the legislature will defeat the games, creating a $67.3 million hole in Allen's budget that would have to be filled by other new revenue sources or reduced spending.
Norfolk Sen. Stanley Walker, Democratic co-chairman of the Senate Finance Committee, said the uncertain future of the games could make it difficult for the General Assembly to budget state finances.
"I'm not confident it's a reliable source of revenues," Walker said.
Questions about the money expected from Trigon could further cloud the budget picture. In exchange for authority to convert to a for-profit company, Trigon has agreed to create a $159 million charitable foundation for education and medical research. That plan was worked out in negotiations with the attorney general's office. It is subject to approval by the State Corporation Commission.
Allen's budget plan earmarked $95 million of that amount for higher education.
But Democratic lawmakers signaled that they may try to have the entire $159 million deposited in the state's general fund, which lawmakers allocate.
Staff writers Margaret Edds and Robert Little contributed to this story.
LENGTH: Medium: 90 lines KEYWORDS: GENERAL ASSEMBLY 1996by CNB