THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, January 18, 1996 TAG: 9601180422
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY WARREN FISKE, STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium: 95 lines
Facing stiff opposition from anti-gambling groups, the Allen administration backed away Wednesday from a proposal to bring two controversial lottery games to Virginia next year.
State Lottery Director Penelope W. 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 a 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 Atty. Gen. James S. Gilmore III on the proposed Trigon Blue Cross Blue Shield settlement that Allen expects use 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 A. 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 to bring Powerball and keno to Virginia last month, 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 uses video monitors that report winners as often as every five minutes. Critics say it is closer to casino-stylegambling 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 to introduce bills this fall 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 two-year, $34.6 billion 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 R. Melvin, D-Portsmouth.
Among the most vocal opponents of the games is Del. J. 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 games will be defeated by the legislature, creating a $67.3 million hole in Allen's budget that would have to be filled by either finding other new sources of revenues or be reducing spending.
Norfolk Sen. Stanley C. 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 or revenues,'' Walker said.
Questions about 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 from 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 they allocate.
``Funds should flow through the appropriations process,'' argued Del. J. Paul Councill Jr., D-Franklin. MEMO: Staff Writers Margaret Edds and Robert Little contributed to this
story.
by CNB