February 28, 2017

House panel endorses changes in lottery operations

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Laura Paskus

Financial bonuses for state lottery officials and contractors would be tied to increases in scholarship money available to New Mexico college students under a bill that got unanimous bipartisan approval from a House committee Monday.

House Bill 250, sponsored by Rep. Jason Harper, R-Rio Rancho, also would require the state lottery to transfer money from unclaimed cash prizes — usually $2 million to $4 million a year — to the lottery scholarships fund.

In addition, the bill would halt a pilot program launched last year in which lottery tickets are sold at self-serve gasoline pumps. Lottery officials launched the program at 13 gas stations — and 100 gas pumps — around the state, despite the fact that a House committee in 2015 killed legislation sought by lottery officials that would have legalized gas pump lottery ticket sales. HB 250 would prohibit all video lottery games connected with fuel pumps or automatic teller machines.

“This isn’t dictating how bonuses are structured,” Harper told the committee. “But, if there is a bonus, it can only be when they increase scholarships.”

The bill goes next to the full House of Representatives.

According to a fiscal impact report by the Legislative Finance Committee, the state Lottery Authority said it does not currently offer bonuses or incentives to its employees or contractors.

However, the report says the contract for the lottery chief executive in February 2014 through February 2015 included a bonus of 10 percent of base salary if the lottery saw an increase of 10 percent or more in total gross revenues. It called for an extra five percent bonus if Instant Ticket total gross revenues increased by at least eight percent and an additional five percent if the lottery had at least $500,000 dollars in contract savings or budget adjustments.

David Barden has been in charge of the lottery since December 2013, when he was first hired as interim CEO.

Some members of the House Business and Industry Committee expressed dismay that lottery officials could get bonuses.

But controversies over bonuses for lottery officials go back to at least 1999 when legislators criticized the lottery for paying more than $213,000 in bonuses the previous year.

“Do other government agencies provide bonuses?” asked Rep. Jane Powdrell-Culbert, R-Corrales.

“Why don’t you just say, `No bonuses’?” asked Rep. Carl Trujillo, D-Santa Fe.

Harper said he had considered that approach but, “I didn’t want it to turn into a `We hate the lottery bill.” Nonetheless, Harper added, “We can have that conversation.”

Gov. Susana Martinez last year vetoed a bill transferring unclaimed prize money to the tuition fund. In her veto message she quoted both the New Mexico Lottery Authority and the Higher Education Department, who said that “transferring unclaimed lottery prizes directly into the Lottery Tuition Fund would reduce the amount of money available to be invested in new games and larger payouts, thereby reducing lottery activity and resulting in an annual decrease in revenue for Lottery scholarships.”

The scholarship fund, created in 1996, uses 30 percent of proceeds from New Mexico Lottery ticket sales to pay for in-state college tuition for eligible New Mexico students. The scholarships at one time covered 100 percent of tuition for these students, but the subsidy dropped to 95 percent in the 2014-15 school year and to 90 percent in the current school year. The level would have dropped even lower if lawmakers hadn’t dipped into the state’s general fund and alcohol excise tax revenue to supplement the lottery fund. That liquor excise tax contribution is scheduled to end this year.

The New Mexico Lottery’s launching of the gas pump pilot program last year prompted Harper and 13 members — both Republicans and Democrats — of what was then called the House Ways and Means Committee to write a letter of protest to Barden.

“The New Mexico Lottery appears to have rolled out this game with no notice or public hearing, merely an announcement at the New Mexico Lottery Authority Board hearing last month,” the letter said. “… We are extremely troubled by the New Mexico Lottery’s unilateral actions in this matter.”

Contact Steve Terrell at 505-986-3037 or sterrell@sfnewmexican.com. Read his political blog at www.santafenewmexican.com/news/blogs/politics.

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