Document Actions
Whole Lotto Changes
posted at 2007-02-27 23:55 | Last modified 2007-11-14 10:38
If you've been paying attention, you probably already know the state's year-old education lottery isn't living up to its initial billing. Today, Gov. Mike Easley announced what he wants to do about that. Some details were a little surprising.
Background
When Governor Mike Easley and affiliated lawmakers first started to throw around lottery numbers in early '05, they were talking 350 million in profits. That's about right for a first year lottery in a southern state. It takes time for lotteries to mature, and most need a few years to grow to their full revenue potential.
But as the lottery debate raged on, and the political stakes got higher, so did the estimates. By the time lawmakers passed the bill, the estimate had somehow become 400 to 425 million. It's interesting that at the time, new (and highly paid) lottery director Tom Shaheen didn't discourage those higher estimates. But the lottery commission's original chairman, Charles Sanders, openly acknowledged he thought the 400+ million figures were unrealistic.
What now?
Easley budget advisor Dan Gerlach (who, by the way, was bitterly opposed to a lottery in his days at the NC Justice Center before he went to work for the Gov) had to get up in front of lawmakers today, tell them they'd spent more than the lottery had brought in, and ask them to change a few things to help increase future proceeds.
First, Gerlach says the state has to raise the amount of proceeds it's putting back into prizes. NC earmarks 54% of proceeds for prizes, but Gerlach says surrounding states are around 60%. The Governor's proposal would raise NC's prize percentage to 63%, while decreasing the percentage going to education from 35% to 29%. Gerlach says raising the prizes will double the sales of scratch-off tickets, which means, in the long run, the state will make more by taking less. You can hear Gerlach's remarks to lawmakers here.
Second, Gerlach says the Governor wants to change how the lottery proceeds are used. In the initial bill, 50% of proceeds were earmarked for pre-K and class size reduction; 40% would go to local school construction; and 10% to scholarships. Gerlach didn't offer specific numbers today, but says the Gov wants to put a lot more of the lottery money into pre-K and early ed at the cost of the other two areas. In 2005, some reluctant lawmakers said they voted for the lottery specifically because it would help local districts build schools. It's not clear yet whether they'll back changes that will reduce that.
In other news...
Black Fallout
House and Senate GOP leaders said today legislators have been damaged in the public eye by the Jim Black pay for play scandal, and won't regain the public's trust till they change how they do business on Jones St. House Caucus leader Paul Stam made a point of saying lawmakers should be cooperative and compliant with federal and state investigations...but when asked whether he was referring to any ongoing or anticipated probes, Stam quickly backed off, saying repeatedly he has "no inside information."
High-Risk Insurance
The House Health Committee today unanimously approved H265, which would create the state's first high-risk insurance pool. The pool would cover 30 thousand people whose
health problems make them uninsurable under the current system.
The pool would be funded by participants' premiums, which would
be 175% of the average rate, and by an "assessment" (fee) on insurance companies per person they cover in NC. That fee would start at .70/month, rising to $2/month by 2012. Federal and state funds would be used as start-up and reserve money. Eligibility would be restricted to people who can prove they can't get insurance they can pay for anywhere else.
Most critics of the idea agree something needs to be done to help the system balance the costs of caring for the folks private insurers won't take. But many say the current plan amounts to a tax on those who have insurance, since insurers are likely to pass those fees down to policyholders. Several GOP lawmakers said the state should pay for the fund, not private business. But supporters say studies show about 10 percent of insurance premiums already go to subsidize care for the uninsured. They say the high risk pool would help to alleviate that, resulting in net savings to consumers and the health care system - some other states with pools have seen overall insurance rates level off or even fall.
If you missed today's debate on the pool proposal, don't worry - the bill has to be make it through at least three more committees (Insurance, Finance, Approps) before it makes it to the floor for a full vote.
Comments? Drop me a line.
