Cindi Ross Scoppe

You asked: Who allowed the $2.5B lottery lie, and where’s the money going? I answer

MY COLUMN explaining the Legislature’s $2.5 billion lie about the state lottery generated a lot of outrage, cynicism and frustration — and justifiably so. It also generated two recurring questions, which I thought were worth answering for everyone:

Where has all the lottery money gone?

And, who let this happen?

The first answer is straightforward and complicated at the same time, and it gets to one of the reasons a lot of people don’t trust the Legislature (or any government) to spend money the way it promises

As required by the state constitution, all of the profits from the lottery have in fact gone to education — $435 million in the fiscal year that just ended and about $5 billion total since it started in 2002. (That’s not all of the lottery revenue. Two-thirds the money goes into prizes, 7 percent into commissions for retailers and 3 percent for administration and advertising. That leaves 25 percent for education.)

The problem — this is where the lie comes in — is that supporters promised and the Legislature required in state law that lottery profits would be used to “supplement” rather than “supplant” money the state was already spending on education. Specifically, the law said the state had to keep spending the same 57 percent of its general revenue on education as it had before the lottery.

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Cindi Ross Scoppe

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They promised the SC lottery would supplement education spending. It was a $2.5B lie

I don’t want my government enticing me to become an addict. Do you?

Here’s the fix for those dumbed-down, budget-busting scholarships

Who’s shortchanged the most in SC budget? The Senate actually wants to make it clear

Read the lottery law’s education-funding promise, at 59-150-350(D)

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This promise was crucial to convincing voters to amend the constitution to allow a lottery: Many people were convinced that the Legislature had raised the sales tax by a penny to pay for the Education Improvement Act but then spent that money on other causes, and they wanted assurances that the same thing wouldn’t happen with the lottery. Particularly because legislators the nation over are notorious about pulling this bait-and-switch with lotteries.

Technically, the Legislature didn’t divert the EIA penny funds to other programs. All of the money generated by the EIA penny goes into a separate EIA fund, and the Legislature spends that money each year on specific education programs. It’s all spelled out in the annual state budget. But there was no requirement that the portion of state funding going to education remain the same after the EIA penny passed, and it didn’t.

Of course money is fungible. So while there is a huge legal difference between diverting EIA money to non-education programs and simply allocating less regular state revenue to education, the practical effect is the same.

The lottery was supposed to be different, because of that law requiring that at least 57 percent of non-lottery funding must go to education. But as I’ve been reporting for the past year, the Legislature simply suspends that law each year and spends a smaller portion of the budget on education. So far, it has underfunded education by $2.5 billion. And the deficit is getting larger each year.

Spending less than 57 percent of general and EIA funds on education — down to 52 percent this year — allows the Legislature to spend that money on … well, that depends on your perspective. You could say it spent a lot of the money to avoid making even deeper cuts to the rest of government during the recession. You could say it spent the money in order to make up for tax cuts. You could say it spent the money to expand all sorts of non-education programs. Whatever your perspective, the bottom line is that if the Legislature had kept its promise, it would have had to either spend less money on the rest of government or make fewer tax cuts or raise taxes.

It’s tougher to say precisely who’s responsible for this. During the 2003 recession, the Legislature added a proviso to the state budget that suspended the law that spells out how much the state has to spend per pupil toward basic education each year. There probably were recorded votes on that, because it was controversial, but that was a long time ago. Eventually, the Legislature (briefly) restored full funding under the per-pupil law, but that proviso remained in the budget.

What no one seemed to notice was that the proviso also allowed lawmakers to ignore the lottery-law requirement. And in 2010, they started doing that.

What you need to know about the state budget is that each one uses the previous year’s budget as a template. There has to be a vote to add anything to that template, or to delete anything, or to change anything. But there’s no vote to leave things the same — whether those things are amounts of money or the one-year laws called provisos. That’s understandable, since there are about 17,000 separate lines in the budget, nearly all of which have more than one part.

The proviso that suspends the 57-percent requirement has remained in the budget all these years because the Legislature has never voted to take it out. At least in recent years, no one has even made a motion to take it out.

So few if any current members of the Legislature have ever actually voted to suspend the 57-percent requirement, and even fewer would have even realized that such a vote affected the lottery requirement. At the same time, though, every member of the Legislature is responsible for the fact that the requirement has been suspended year after year, and is suspended again this year, because any legislator could have made a motion to remove the suspension, which would have forced a vote. But no one did.

Ms. Scoppe writes editorials and columns for The State. Reach her at cscoppe@thestate.com or follow her on Twitter or like her on Facebook @CindiScoppe.

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