February 7, 2019

After pushback, sponsor revamps state lottery bill

State Sen. Jacob Candelaria on Wednesday amended his controversial bill on the state lottery, adding a guarantee that at least $40 million a year from ticket sales would go for college scholarships.

His initial proposal would have eliminated a section of state law requiring that 30 percent of gross lottery revenues be turned over each month for scholarships.

That version of the bill came under fire. Funding for scholarships is the sole reason the New Mexico lottery exists.

In response to complaints by students at the University of New Mexico and others, Candelaria revamped his Senate Bill 283 by designating guaranteed payments for the scholarship program.

“This is the protection that ensures that students are not harmed,” Candelaria said.

The bill cleared the Senate Education Committee on a 7-1 vote. Sen. Bill Soules, D-Las Cruces, dissented. He said the revenue promised for scholarships was too low.

As rewritten, Candelaria’s bill would get rid of the 30 percent requirement to fund scholarships. But it would cement a payment of $40 million for scholarships in the budget year starting in July.

The guarantee would increase to $40.5 million the following year and then at least $41 million annually thereafter.

Last year’s payout for scholarships was $40.2 million, according to lottery records. That was an increase from $37.8 million in 2017 but a drop from 2016’s record of $46.3 million.

Another facet of the bill is a safety valve. If lottery tuition payouts don’t top $41 million after 2022, the 30 percent minimum will be reinstated.

In addition, Candelaria’s bill requires the lottery to cut its operating expenses from about 16.7 percent of revenue to 15 percent across the next three years.

Soules still faulted the bill for shortchanging students. He said lottery records show the average annual amount for scholarships was about $42 million during the past 10 years, but the bill would cause a drop in funding.

He also questioned the lottery’s ability to improve lottery sales in that period.

“I don’t see the evidence that this is going to have the effect that we want,” Soules said.

Lawmakers created the lottery scholarship program in 1996, and for almost 20 years it covered 100 percent of tuition for in-state students who met eligibility requirements. But keeping pace with demand for the scholarship has been a concern for years because of increasing tuition rates, among other reasons.

Legislative efforts to remedy the problem began with reducing the amount of the scholarship, first to cover 95 percent of tuition in 2014-15, and then to 90 percent in 2015-16. It would have dropped even more if lawmakers had not decided to draw on the state’s general fund and alcohol excise tax revenues to supplement the scholarship fund.

The liquor excise tax contribution ended in 2017, and the state Higher Education Department then decreased the scholarship to 60 percent of tuition expenses.

Lawmakers from both major political parties have unsuccessfully tried to remove the 30 percent cap for years. They advocated that more money be spent on prizes and promotion. Then, they say, at some point more money would flow to the scholarship program.

“The reality is, we need to try something different, give the lottery time to be flexible,” Candelaria told the committee.

Only two people — a member of the New Mexico Lottery’s board and a lobbyist for the University of New Mexico, spoke in favor of the bill. No one spoke against it.

The bill next goes to the Senate Finance Committee.