Greensboro, NC - February 15, 2006
 

RALEIGH -- This much everyone can agree on: Gov. Mike Easley plans to use money generated by the new education lottery for items currently paid for with tax dollars.

Specifically, he wants to replace tax funding that goes toward pre-kindergarten and class-size reduction programs with lottery proceeds.

What exactly that means depends on who's talking or, in the case of a flurry of recent media reports, writing.

"Education lottery money will supplement, not supplant, existing spending for education, and I will not recommend nor sign legislation that reduces the state's spending for education," Easley said in a written statement Tuesday, trying to put a lid on a burgeoning budget debate.

Supplanting is a term lottery opponents have used to describe what they say is inevitable: That any additional support for education created by the lottery will eventually displace tax dollars rather than boost spending for education.

And that is exactly what the governor's suggestion would do, said Paul Luebke, a Durham Democrat who teaches at UNCG and serves as a finance chairman in the House.

"The no-supplant argument was one of the most important that Speaker (Jim) Black used in convincing a majority of House members to support the lottery," Luebke said. Luebke voted against the lottery bill.

What the governor proposed, Luebke said, "is the definition of supplanting."

Not true, say Easley and his budget advisers.

Pre-kindergarten programs for at-risk children and a reduction of class sizes in grades one through three are two of the four programs on which the state's lottery law allows legislators to spend the gambling proceeds.

Early in his first term that began in 2001, Easley had hoped lottery proceeds would fund those two items from their inception. But legislators approved the new spending years before passing the lottery in 2005.

With lottery revenues expected to begin flowing in less than two months, Easley wants to replace the tax dollars that had gone to pre-kindergarten and class-size reduction programs with lottery proceeds.

Doing so, administration officials argue, frees up roughly $203 million in taxes for other education needs -- such as raising teacher salaries -- while insulating pre-kindergarten and class-size reduction initiatives from the vagaries of the annual budget process.

"These programs are so important that they have to be in an off-budget situation, funded in good times and in bad, no matter what the economy is doing," said Dan Gerlach, a senior policy adviser to Easley.

Lottery proceeds also will go toward college scholarships for needy students and help counties pay for school construction. Those programs will be new and are not part of the current debate.

Even with additional spending from the lottery, Gerlach said, the budget Easley will pitch this year will propose increasing the tax dollars spent on education.

"The point is here that absolutely, positively, no doubt, general fund spending for education will go up. There is no supplanting nor will there be any supplanting. Period," Gerlach said.

Although not all are as explicit as Luebke, a sizable number of legislators have aired their own fears about how lottery proceeds might be lost in the budget shuffle.

Rep. Maggie Jeffus, a Greensboro Democrat, said that one of the biggest disappointments she has seen with other state lotteries is that proceeds get diverted from where they were promised.

"I'm hoping North Carolina is going to learn from the mistakes of other states and not let that happen," Jeffus said.

Sen. Phil Berger, an Eden Republican who represents parts of Guilford and Rockingham counties, said he fully expected lottery proceeds to get lost in the shuffle.

"I think what we've got is exactly what folks expected or should have expected," said Berger, who led lottery opponents during intense battles in the Senate.

Berger said the only way to know for sure how the lottery was affecting education was to follow the course laid out by State Auditor Les Merritt, also a Republican.

Merritt began asking Easley's office in December for data to help benchmark the state's current education spending. Since then, staffers from both offices have met once.

"When the tax money goes back into the general fund as the governor is proposing, you've got to track that somehow," said Dennis Patterson, a spokesman for Merritt.

But Gerlach said the method for tracking the money is in place, with no need for complicated accounting measures. If the amount of tax dollars the state spends on education grows from year to year -- without taking into account the lottery -- then the lottery is living up to its promise, Gerlach said.

http://www.news-record.com/apps/pbcs.dll/article?AID=/20060215/NEWSREC0101/602150314/1001/NEWSREC0201