The Hawg hates lotteries

By Ethan Nobles on 7:44 PM

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Oddly enough, one of the things that annoyed me the most about this week's election was the fact my fellow Arkansans decided that having a lottery is a good idea.

Our lieutenant governor, Bill Halter, has run around for the past couple of years swearing that a lottery financing college scholarships is just what this state needs. Here in Arkansas, we're 49th in the nation when it comes to the number of adults holding at least a bachelor's degree.

Halter estimates the lottery will bring in about $100 million a year for scholarships. About two-thirds of the people who turned out in the Natural State to vote on Tuesday agreed with Halter.

I've been firmly against the lottery for at least three reasons, all of which I'll torment you good people with right now.

It won't work

Holding a lottery to boost the number of adults with college degrees in this state is a terrible idea. We're 49th now and will remain 49th regardless of how many scholarships are handed out to students. The idea, of course, is that thriving economies rely on highly-educated people getting high paying jobs, thereby increasing the tax revenue the state and local communities collect. Also, people with money buy things and that benefits the economy as a whole.

So, if you hand out more scholarships, that will result in more Arkansas kids heading to college and they'll help the state's economy, right? Wrong. Horribly wrong, in fact.

The problem, see, isn't that Arkansas kids aren't heading off to college. The problem is that they tend to leave the state after they get their degrees. Why? We don't have enough jobs to keep people in the state.

Take my little brother, for example. There's a kid with an education that was heavily subsidized by the state of Arkansas. He graduated from the public schools system in the state and went to the University of Arkansas on a full scholarship. Yes, the state of Arkansas picked up his room and board, tuition and even paid for his books.

He graduated first in his class in chemical engineering from the UA and then earned his optometry degree in Chicago. He'd love to live in Arkansas, but he's in North Carolina. Why? He made over $100,000 his first year in practice in North Carolina, but the best job he could find in the Natural State was around $28,000 (not including some vague promise of maybe-possibly-perhaps a bonus at, like, some point in the future).

You're not going to get a highly educated fellow like that to stick around and work for less than 25 percent of what he'll get elsewhere. Also, let's not forget that we've got one of the better engineering schools in the country at the University of Arkansas and a lot of kids from this state attend it.

They graduate and then head off to places like Texas that have a lot of high-paying jobs for engineers -- career opportunities that are comparatively rare here.

What we're already doing, then, is subsidizing the education for students for the benefit of other states. This lottery amendment will only increase those subsidies. Until we do something in Arkansas to increase the number of jobs for the heavily-educated people we want to stay here, we will always have problems keeping those people in the state.

Of course, no one seems to want to talk about that problem as it's a complex and difficult issue to tackle. Politically, then, passing a lottery is a much easier task to tackle -- Bill Halter can run around for the rest of his days declaring that he did something to improve education in Arkansas. That will look great on his resume, a fact of which a young man who obviously wants to build a long career in politics is aware.

He'll benefit from the lottery amendment, then, probably more than the state's economy will.

Arkansas already has a surplus. Why give the state more money?

I hate the idea of putting a new tax in place when the state is running at a surplus. And, yes, a lottery is a tax.

Right now, Arkansas has a $250 million budget surplus. Why not use some of that to pay for scholarships? In the alternative, why not offset the revenue the lottery will bring by cutting the state sales tax?

The sales tax here is ridiculous -- state and local taxes here in Benton come to 8.5 percent. Other cities are running a tax of as high as 10.5 percent. Why? A little thing called the Futrell Amendment which states that the state's income tax can only be raised by the approval of three-fourths of both houses of the legislature.

In other words, it's almost impossible to raise income taxes in Arkansas, so the state has had to resort to other measures. The most popular of those is to boost sales taxes.

That has hurt a lot of cities in this state. Take Texarkana, for example. As the name implies, that city is split between Texas and Arkansas. The Texas side is booming and wealthy, whereas the Arkansas side isn't. Why? Let's say you live in Texarkana and want to buy a lawnmower. Are you going to buy it on the Arkansas side of town and pay sales taxes or save some money and drive to the Texas side?

The answer to that question is obvious and it's the same whether you're talking about lawnmowers, cigarettes or just about everything else.

If you're going to have a lottery and the state routinely collects surpluses, why not cut the sales tax and help out merchants in this state? The answer to that is simply -- once the government puts a tax in place, it almost never eliminates it.

Fungibility (how lottery revenues indirectly boost general budgets)

Lottery revenue is largely fungible -- the money that is spent on education prior to the lottery is often moved to the general budget, while the lottery revenue is spent on education. In other words, we'll not increase our scholarship fund by $100 million even if the very optimistic goal of $100 million is raised annually through the lottery.

In the current fiscal year, the state has budgeted $47.3 million for college scholarships. If things play out like they do in other states, then, the $100 million projected by Halter will pay for scholarships and that $47.3 million that's set aside for scholarships now will be added in the general budget. That's a net gain of $52.7 million in scholarships, thanks to the lottery. Not bad.

But what if Halter's projections are wrong? Arkansas Advocates for Children and Families estimates the lottery will generate $61.5 million in annual revenue, resulting in a net gain of $14.2 million. The state Department of Finance and Administration estimates annual lottery revenue of $55 million and that results in a net gain of $7.7 million.

If the Department of Finance and Administration is right, then, we will have agreed to add $47.3 million to the general budget all for a net gain of $7.7 million in new scholarships. And, remember, we'll be adding that money to a state treasury that routinely yields a surplus. That's a great deal for the state government, but not such a good one for us taxpayers, is it?

Of course, Halter's projections may be right, but I tend to trust the ones from the Department of Finance and Administration. The Department is full of people who collect taxes and know the ins and outs of them in Arkansas. Halter worked in the Bill Clinton administration. You could trust Clinton about as far as you could throw him, and I suspect the same is true of his lackeys.

I won't get into the obvious morality issues and the fact that lotteries tend to soak up what little excess income the poor have. but I will say that we need to make sure that we resist any other forms of gambling in the state.

Yes, we've got a horse track (Oaklawn) in Hot Springs and dog races (Southland Greyhound Park) in the Delta, but those have been around for years. I sure as hell don't want to see people getting excited about casinos in Arkansas.

Ever been to Tunica, Miss.? You've got casinos all over the place and the area is just seedy, cheap and nasty. We don't need that kind of nonsense here in Arkansas.

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2 comments for this post

Now here's hawg's wife view on the lottery... I voted for it, why did I vote for it you may ask??? When my husband is SOOOO against it. Because I want to win the lottery!!! Will the hawg spend some of the winnings should I win? You bet your ass he will. And anybody who is against the lottery, here's idea... "DON'T BUY A TICKET!!!" No one is forcing you to play the lottery... and hey if it goes for tution for kids in the state, hey I have 2. Our kids have two choices when they turn eighteen and gradute high school, either go to college or join the military, because they ain't living here. So all the money from the lottery might pay for my kids to go to college, and the better part is I have a one in million chances of winning the lottery. That's one more chance I had before we had the lottery.

Now husband will comment that I am some kind of crazy... but who cares... the only question I have is when can I buy my first ticket, 'cause you can bet I will be one of the first people in line to get one...

Posted on November 9, 2008 at 2:29 PM  

Crazy woman!

My own wife is against me!


Posted on November 9, 2008 at 5:35 PM  

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