County leaders concerned about state's idea to change lottery funds use policy
By Steve Herring
Published in News on June 15, 2010 1:46 PM
A provision in both the state House and Senate budget proposals would allow millions of dollars in lottery money to be diverted from school districts' capital funds to the state Department of Public Instruction to maintain teaching positions and for other personnel costs related to schools.
The House budget alone calls for $100 million to be used in that manner.
According to the Senate version, "during the period beginning July 1, 2010, and ending June 30, 2013, a county may use for any educational purpose, for which it is authorized to appropriate funds under Chapter 115C of the General Statutes, any funds transferred to the Public School Building Capital Fund and allocated to that county."
That has raised concern about budget planning among county commissioners, including those representing Wayne County.
For County Manager Lee Smith, the proposal could be a boon or a drain.
"I might get into the state budget next year and find out I have a $2 million cut or might find out -- I doubt this -- they are going to give me $2 million more dollars," Smith said. "It is more of an odds that they will take $2 million. The state is looking to shift more lottery money into operations, and that is the worst plan ever in my opinion. That is the end, and we have just got started."
In Wayne County's case, money already appropriated for capital projects could prevent the state from claiming any lottery funds, Smith said.
"That is why I am at least glad these first five (county) schools were renovated so that when we go up and argue with our legislators and governor that, 'you can't do that. That money has been obligated to pay for these things. You are putting another tax burden on communities again that can't afford it because the ones that are using (lottery funds) are the ones that don't have the money.' I am afraid of that, but go look at other states for the lottery. They did the same thing."
When the lottery was first discussed, one of the promises made was that the money would be used for schools and not to shore up the state spending plan.
"The lottery has been place how long? Four years?" Smith said. "At least in Virginia, they had it for years before they did that. Wow, we are talking mighty fast. We didn't even get the enjoyment out of it for local communities in North Carolina."
Smith said he understands that the reason there is a discussion at all is the state of the economy -- and the struggles to keep the state budget balanced.
"The state of North Carolina has got problems," he said. "They have to fill a hole. It is not that I blame them. They've got to do something. But it does mean we have got to be smarter and not over obligate too fast. That is why we went ahead and used the lottery cash and held off on Eastern Wayne and Norwayne because that revenue to debt service between the two was $12 million to $14 million. If you lose that revenue, that means that as a local community we have to come up with that. You could be talking three cents on the tax rate just to make that payment."
Those concerns prompted the county to back up and move the two projects to 2012 because the county is unsure what the state is going to do over the next two years, Smith said.
"I am afraid they are going to take the money," he said. "If they don't take it all, they are going to take a lot. That was the same case with 911. As soon as it shifted to the state, we said, 'we can tell you what will happen,' and it did."
The bottom line is, without those lottery funds to help fund capital projects, many school districts will have to choose between increasing taxes and waiting on new buildings.
"That is sad for a lot of these communities that really need some schools. That is sad because some folks banked on it and some have structured their debt service on it already. That is why we held back -- use the cash, but hold back on debt service because I don't trust what the state is going to do."