Boost facility funding from lottery


John Hood - Contributing columnist



State Sen. Rick Horner can quip with the best of them. During a recent debate about school construction needs in North Carolina, the Wilson County lawmaker and former school board chairman argued that the state lottery ought to fulfill its original mandate by producing more money for local facilities.

“There’s nothing more important than running a casino honorably,” Horner deadpanned.

It was a funny line, and got lots of laughs from his audience of educators, community leaders, journalists, and parents assembled at the Booker T. Washington Theatre in Rocky Mount. Horner, a Republican, joined Sen. Erica Smith (D-Northampton), John Locke Foundation analyst Terry Stoops, and North Carolina Justice Center analyst Matt Ellinwood on the panel for the debate, which was hosted by Loretta Boniti, a reporter and anchor for the statewide cable channel Spectrum News.

But Horner’s point was a serious one. For decades, advocates of a government-run lottery for North Carolina promised that its net revenues would boost education spending in the state.

Opponents, including me, predicted that whatever the original language of a lottery bill might be, future legislatures would find it convenient to redirect money to whatever budget hole lawmakers wanted to fill at the time — even if that meant supplanting current education funding, derived from generally applied taxes, with gambling proceeds.

I don’t think the government should prohibit gambling, mind you. I believe in individual freedom, including the freedom for individuals to make incredibly bone-headed decisions coupled with the responsibility of living with and learning from the results of those decisions.

What I and others objected to was putting state government in the gambling business, with a monopoly that would manipulate its marks into bearing a disproportionate share of the cost of government services. The propensity to play the lottery isn’t equally distributed, and the resulting tax bite is a regressive one — poorer households spend a larger share of their incomes buying tickets than wealthier ones do.

To swap broader taxes on sales, income or property with a narrower revenue source was, of course, one of the main attractions of the state lottery for some proponents, who didn’t plan to play themselves but welcomed the idea of someone else paying government’s bill. This was and is bad public policy, however.

One way to lean against it — and one that Horner, Smith, Stoops, and Ellinwood all endorsed in some form — would be to restore the share of net lottery proceeds dedicated to school construction to the original 40 percent contained in the 2005 law that created the lottery. In recent years, that percentage has dropped into the teens, although state leaders already seem to be headed in the direction of pushing it back up.

As the lawmakers and policy experts emphasized during the Rocky Mount forum — the first in a series of “Hometown Debates” on education hosted by the North Carolina Institute of Political Leadership and its local partners — school construction has traditionally been the primary responsibility of local government, not the state. Thus dedicating more lottery funds to it poses less of a risk of supplanting other state funding streams, at the very least.

During the debate, which was broadcast on television by Spectrum News and on radio by the North Carolina News Network, the panelists disagreed about other funding approaches for school facilities. Smith and Ellinwood said the legislature ought to place a $2 billion school-construction bond on the statewide ballot in 2018.

Stoops said the 2016 Connect NC bond package should have included K-12 capital needs, while Horner questioned the wisdom of statewide borrowing for local school construction, arguing that local communities are in the best position to determine and address their own needs and that putting out lots of capital projects for bid at the same time across the state would bid up the price tag, given the limited number of contractors available.

I don’t think a radical rewrite of the division of labor between the state and localities is warranted. But a more-honorable government casino would be welcome.

John Hood is chairman of the John Locke Foundation and appears on the talk show “NC SPIN.” You can follow him @JohnHoodNC.

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John Hood

Contributing columnist

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