THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, October 23, 1995 TAG: 9510210005
SECTION: FRONT PAGE: A6 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 69 lines
Both political parties are making promises about lottery profits as if the money were readily available for new spending. In fact, the money already is being used.
Initially, Virginia spent its lottery profits on construction projects like college buildings. Since 1990, however, lottery profits have gone into the state General Fund, from which the state withdraws money to pay its bills.
Think of the General Fund as a deep lake of money that is fed by many rivers of money. The biggest river, more than $4 billion annually, is the individual income tax. The next biggest river is the sales and use tax, at about $1.7 billion. Then the next two biggest rivers are the corporate income tax and the lottery profits, both running a little more than $300 million a year. The total money flow into the General Fund is more than $7 billion a year.
When lottery profits are committed to a special purpose, like education, the lottery river, in effect, is dammed off from the General Fund. The dam forms a $300 million-a-year pond to be spent on the special purpose, but the lake shrinks by a like amount, as though a drought had set in.
Democrats got around the lake-shrinkage problem last winter by reserving all lottery profits for education but not building the lottery-fund dam. By their account, $314 million of the General Fund money withdrawn for education was from lottery profits. How Democrats knew that is a mystery, since the General Fund moneys are as mixed together as seven dyes poured into the same flask. Still, the public was assured all lottery moneys went for education.
A large drawback to the Democrats' method, as staff writer Warren Fiske reported Tuesday, was that the bill reserving lottery money for education gave no new money to education - not a penny more. It didn't change the amount of money flowing into the General Fund. It didn't change the amount of money flowing from the General Fund to education. Nothing changed, except Democrats said they had committed all lottery funds to education.
Republicans, to their credit, acknowledge that committing lottery money for a specific purpose lessens the amount of money in the General Fund lake available for other purposes. That loss of money must be compensated for either by reducing other services or finding new revenues to flow into the lake.
Gov. George Allen proposes returning lottery money to localities but starting small: $15 million the first year and gradually building over five years till localities get all lottery money. His plan calls for replacing the lottery money withdrawn by various means. The first year's $15 million drain from the General Fund would be compensated for by ``technical corrections, efficiency measures and program reductions.'' Later withdrawals would be replaced mainly by revenue growth, if all went as planned.
Many questions remain, however. If localities get the lottery money, will they receive less money than before from other state sources? What matters is the total amount localities receive. What if state revenue growth - projected at $700 million over the next biennium - is eaten up by increased state spending in other areas like prison building and health care for the poor? And it should be kept in mind that one legislature's actions are not binding on subsequent legislatures. If Governor Allen's five-year phase-in plan were enacted by one legislature, for example, it might be killed by another before all five years were up.
Lottery money once was a separate account, a kind of bonus the state could play with. Since 1990, however, lottery profits have been spent the same as regular tax money. There is nothing magical or free about lottery money. Be wary when politicians promise to use it for special purposes. by CNB