Lottery Revenues Rise With Unemployment
Special Report - February 2, 2010
Despite North Carolina posting record high unemployment figures since November 2009, the lottery continues to report higher than expected and increasing levels of revenue. At a North Carolina Lottery Oversight Committee meeting on January 28th, Elizabeth Grovenstein, the Assistant State Budget Officer for Education, and Brian Matteson, from the Fiscal Research Division at the Office of State Budget and Management, explained how education revenues from the lottery are higher than originally projected for fiscal year 2009-2010.
A year ago, 2009-2010 fiscal year gross ticket sales were projected at $1.252, a number lower than the preceding year to take into account the effects of the recession. The revised projection for this year’s lottery ticket sales exceeds that original projection by almost $120 million, at $1.371 billion grossed. Net revenues for the education fund are now projected to be $419.3 million dollars for this fiscal year, which is a full $51.2 million higher than the original $368.1 million projection.
The $50 million that the North Carolina Education Lottery held in a statutorily required reserve fund will have to be replenished out of revenues originally intended for education. As we previously reported, Governor Perdue transferred the entirety of this lottery reserve in 2009, to plug part of North Carolina’s budget gap. Representatives from the Office of State Budget and Management explained that the General Assembly had no current plans to replace that $50 million in re-appropriated funds. Rather, the General Assembly overrode the statutory requirement that the fund be financed with up to five percent of each year’s lottery revenues until it reaches the $50 million cap by lowering the cap to $16.6 million, the amount currently in the fund.
Members of the oversight committee questioned whether this usage of education lottery funds was in keeping with the legally specified purpose of the lottery. According to the state law governing the lottery, G.S. 18 C-172; SL2006-225, the committee is charged to “review whether expenditures of the net revenues of the Lottery have been in accordance with Article 7 of this Chapter, and study ways to ensure that net proceeds from the Lottery will not be used to supplant education funding but to provide additional funding for education.”
The Oversight Committee heard the report of increased lottery sales only a day before new unemployment figures were released on January 29th, showing that 86 of the 100 counties in North Carolina experienced another unwelcome increase in unemployment since November 2009. The state, already subject to the worst unemployment figures in its history, saw joblessness increase to 12.1 percent in the Charlotte metro area, and 9 percent in the Triangle.
"The increase in lottery sales during a recession should be expected," according to Bill Brooks, economist and president of the North Carolina Family Policy Council. "Increased unemployment means there are more financially desperate people with time on their hands. Some of these choose to play the lottery for the first time, others will increase their level of play in hopes of winning bigdespite the long odds." The newly reported lottery increases are similar to those reported in July 2009.
NC Lottery Approves "Mega Millions" - November 5, 2009
Economy Down, Lottery Up - July 11, 2009
Lottery Sales Holding Steady - February 19, 2009
Lottery Revenues Up As Economy Slows - September 18, 2008
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