Les Merritt, CPA

State Auditor of North Carolina

 

 

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The News & Record

Editorial - February 16, 2006
 

Lottery:  Follow the Money

Gov. Mike Easley gave his word Tuesday about lottery revenue. It won't replace money the state already spends for education.

Unfortunately, North Carolinians can't take the governor's word for it.

His word cannot change the lottery law, which doesn't say proceeds must add to school spending.

His word cannot command the legislature, which decides how to allocate state money.

And his word cannot bind future governors, who may give their word for entirely different priorities.

Easley's assurance, intended to calm the latest concerns about the "Education Lottery," further exposes its flaws. It was created on promises without guarantees. Some supporters apparently failed to notice.

The lottery law directs that net revenues -- income after prizes and expenses -- go for three education-related purposes: 50 percent to reduce class sizes in early grades and provide preschool programs for at-risk 4-year-olds; 40 percent for school construction; and 10 percent for college scholarships.

Nothing in the law prohibits legislators from using lottery money to replace, or supplant, funds already being spent in those areas. In fact, Easley now says it was his plan all along to do that in the case of class-size reductions and preschool programs, currently supported by about $200 million in tax money. Most North Carolinians probably missed that part of the lottery discussion.

Nevertheless, the governor vows that the supplanted $200 million will stay in the state's education budget rather than disappear elsewhere -- as happens in many other lottery states. For example, Easley would like some of it to be used to lift teachers' salaries to the national average, a worthy goal.

It might require sharp eyes to make sure it's used as intended, however. One pair belongs to State Auditor Les Merritt, who said he wants to devise an accounting system to track education spending.

Dan Gerlach, the governor's budget director, answered that no complicated accounting measures are needed. It's only necessary to look at the total amount of money spent for education to make sure it's increasing.

Merritt's approach is better. Allocations for schools already grow every year as enrollment rises, more teachers are hired and other costs go up. How can North Carolinians know whether spending will increase by the amount it should once lottery revenues are added? The answer is careful watchfulness and timely reporting of all money flowing in and out.

Promises are the currency of any lottery: promises of easy money for players and governments alike. The financially stressed single mother dreams of buying a ticket to a better life and consoles herself with the thought that losing helps pay for a better education for her children. Elected officials dream of new pots of money gained without having to tax anyone.

The most basic promise of this lottery is simple: It will put dollars into education that were not previously available from any other source. Will the promise be kept? It will require close scrutiny to make sure. The governor's word isn't good enough.


 

Paid for by the Les Merritt Committee - P.O. Box 37548 - Raleigh, NC 27627