[T]he first $2 million in profits raised by new electronic lottery games would be used to support the Vermont Veterans’ Home, and not for education, under a proposal by Gov. Peter Shumlin.
Increasing personnel costs and a declining number of residents have led the state to subsidize the home with General Fund money in recent years. The state gave the home $1.3 million in FY14 and $2.7 million in FY15, according to a recent report (posted below).
The plan drew criticism from Steven Jeffrey, executive director of the Vermont League of Cities and Towns, and was received cautiously by some lawmakers.
In his weekly Legislative Report, Jeffrey criticizes the use of lottery money for non-educational purposes.
“You may recall hearing over and over on all the Vermont Lottery advertisements that ‘100 percent of Lottery profits go to the Education Fund.’ That is mandated by state law. This proposal will cost Vermonters struggling to pay their property tax bill an additional $2 million in property taxes,” he wrote.
Administration Secretary Justin Johnson said the use of proceeds from the “Touch Play” lottery console games for the Veterans Home in Bennington is justified because it is new money and would not cut into the Education Fund.
“It would not be reducing existing revenue, it would be adding revenue,” Johnson said. “It’s a new thing, we’ve not had it before. It’s a new revenue stream.”
The Touch Play consoles are new to Vermont, and there are only a few dozen in use in bars and clubs under a pilot program, Johnson said, but their use is expected to grow.
South Side Tavern in Barre and Sunset Grille in Stowe and The Lookout Tavern in Killington are among the locations in the pilot program of two dozen consoles in place. The Lottery Commission plans to expand those locations, officials said this week.
Johnson said the consoles will not divert revenue from traditional lottery sales.
“Our understanding is that they would not compete with lottery tickets that you buy when you go to pay for gas, because they’re in bars and clubs, they’re not in gas stations and convenience stores,” Johnson said. “A portion of the increased revenue would go to the Veterans’ Home. You could argue that not all of the money is going to the Ed Fund, but we’re not actually cutting the Ed Fund, we’re taking some of the money.”
Mark Perrault, senior fiscal analyst with the Legislature’s Joint Fiscal Office, presented the plan to House lawmakers this week in conjunction with a proposal to cut $1.7 million from the Community High School of Vermont. That change, too, would reduce the amount of money paid from the General Fund to the Education Fund.
“It will cannibalize the money that’s currently going to the Ed Fund and redirect to this other purpose,” Perrault said. And the $2 million from the consoles will “go to the veterans home instead of the Ed fund.”
Perrault warned that sales through the Touch Play Lottery consoles “will likely reduce existing revenues from the lottery to the Education Fund (Fiscal Year 2016 estimate is $22.9 million).”
Lottery profits to fund education continue to be flat, so that is a concern in terms of more pressure being put on the Ed Fund this year, Perrault told lawmakers.
Some members of the House Education Committee were surprised by the proposal.
Rep. Ann Manwaring, D-Wilmington, said: “I believe that will only exacerbate the problem with property taxes,” which the Legislature is trying to resolve this session.
House Education Committee Chairman Rep. David Sharpe, D-Bristol, said he is opposed to the use of new lottery revenue for the General Fund.
“I do not support expanding gambling in Vermont and any proceeds from the lottery or any other form of gambling belong in the Ed Fund,” Sharpe said.
“I believe there was a time when the lottery didn’t all go to the Ed Fund,” said Sen. Ann Cummings, chair of the Senate Education Committee. “I know that they’re trying to keep the Veterans Home afloat, literally — it’s located on an underground lake. They’ve had dampness and mold issues. … It’s new revenue that’s not coming to the Ed Fund, and when we’re trying to reduce property taxes, that’s concerning.”
Jeffrey said there have been proposals in the past, including from higher education, to use funds from the lottery, but none has succeeded since the money was dedicated to the Ed Fund in 1998.
A spokesman for Shumlin said the governor is listening to any suggestions to repair a $112 million hole in the FY16 budget.
“The Governor’s proposal does not divert any money from existing revenue streams that support the Lottery and flow into the Education Fund,” Shumlin spokesman Scott Coriell said in an email. “What the proposal does do is use up to $2 million in new revenue generated by a new gaming console that is scheduled to be rolled out later this year to help the Veterans Home. Any revenue raised above $2 million from this new gaming console will go to the Education Fund.”
