Arkansas Blog: Lottery fast track

Gerard Matthews will have a full report later, but it sounds like the legislature's lottery oversight committee signed off on Director Ernie Passailaigue's budget and pay proposals. Sen. Johnny Key had some sharp questioning of some flaws in details and the sole "no" vote.

The big pay for top assistants drew little objection. I note Capsearch Twitter posts that quote House Speaker Robbie Wills thusly:

* Wills says he wants Arkansans to understand why lottery staff earns handsome salaries: big bucks for education.

* Wills uses football analogy and says Arkansasans pay football coaches (and assistants) a lot and understand what they pay for.

Some thoughts. 1) At the highest level, paying big bucks for experienced workers who can hit the ground running has some justification. It has no justification for people who answer phones and do the dozens of jobs for which specific lottery experience is not a requirement, or much of one. 2) It is simply wrong to link state government pay to revenue production. 3) Some people, believe it or not Speaker Wills, DON'T understand football staff pay Or six-figure pay for lottery functionaries. It is a blood insult to thousands of state employees who do more important work to suggest lottery employees deserve more money simply because it's easy to get people to gamble.

BY THE WAY: Ernie P. was heard to comment about "negative" media. That will all go away when the scholarship money rolls in, he says.

You think?

Not if our lottery follows patterns elsewhere over time. Dwindling return with ever edgier ways to promote more gambling (Keno, video lottery terminals, on-line gambling, etc.) The realization at the end that you really haven't helped buttress spending on the targeted recipient, just given legislators a false sense of the adequacy of financing. See: California lottery and its beleaguered public schools. See: South Carolina where a study showed college is less affordable for the average student than it was when the lottery began.

--UPDATE FROM GERARD--

Actually the salary for the top VP slots was an area of criticism from some legislators. Rep. Buddy Lovell (D-Marked Tree) asked if a $90,000 raise from one potential VP from South Carolina and an $85,000 raise for another was justified. Passailaigue reiterated time and again his belief that hiring two vice presidents with lottery experience would save the commission time and money because the lottery would get off the ground and start producing money sooner.

The committee voted to approve the lottery commission's request for pool positions which would allow Passailaigue to start hiring and paying employees. The proposal included the two somewhat-controversial VP positions. Bill Stovall, who works for the House, said the document, while potentially confusing (I believe he said "we're fitting some square pegs into some round holes") was legal. He, together with the staff at the Bureau of Legislative Research, had to come up with a list of positions that met the staffing needs of the lottery but also fell within the guidelines set forth in the statute. Rep. Key, as noted above, was the only member of the committee to vote no, saying, "If I get a question about this from the people back home, I'm afraid I can't answer it." Key said there were some technical inconsistencies in the document itself, which was why he voted the way he did. Politically, it looks great for Key. He knew the yea votes were going to be there and took the opportunity to voice opposition so he can preach fiscal responsibility back home.

The commission also passed a "favorable review" of the lottery commission's operating budget (mentioned in yesterday's report).

Passailaigue defended his actions as executive director thus far and admitted that the members of the committee would likely draw criticism from the media. He said it was difficult for the average person to understand why someone would require such a high salary, and the legislators would likely hear from their constituents as a result. After the meeting had adjourned, Passailaigue was asked if he felt he had brought the legislators around to his way of thinking.

"I'm a firm believer in life that you get what you pay for. What I'm trying to do is what has been done in the most successful lottery start-up in the world and that's in Tennessee. If it works here in Arkansas, everybody will be celebrating. If it doesn't, then I'll be heading back to South Carolina," he said.

-- Gerard Matthews

Comments

The expectation is to generate about $100 million/year in scholarships, for which about $300 million/year worth of lottery tickets needs to be sold. With about 3 million people in the state, that means that the lottery will need to collect about $100/year from each of us.

However, if the same scholarships were financed through taxes, then there would be no need for prize money, and so it would cost only about $30/year from each of us.

With progressive tax rates, and scholarships based on both merit and need, this small tax burden could be shifted to those most able to pay, and benefit those students who are meritorious but unable to afford college.

Instead, we will have the perversion of poor, desperate people trying to get rich quick through the lottery and funding college scholarships for rich kids who don't need them.

Posted by: A. Hugh Mann | July 2, 2009 12:49 PM

Government should be promoting a linkage between work and reward. Like Bill Clinton used to say, government should ensure that people who work hard and play by the rules get rewarded. A lottery culture promotes exactly the opposite mindset---getting rich for doing nothing at all.

As much as I think athletes and coaches are overpaid, most of them actually work hard for their money. The problem there is that lots of other people work just as hard or harder, but for much less reward.

However, it is even worse for government to create and promote a lottery than to pay exhorbitant football coaching salaries. Giving multi-million dollar prizes to people for doing nothing is like giving access for life to a gourmet restaurant to one starving person in Darfur, while charging all of the other starving people to pay for it.

I know, I know, that train has already left the station...

Posted by: A. Hugh Mann | July 2, 2009 01:02 PM

Once the Guv and DF&A get a taste of their cut (7%) of the 60% paid out in winnings this lottery thing will never fail.

With a DEPRESSION right around the corner the lottery will be strong for 3-4 years, perhaps longer.
My financial newsletter, doing a special on economic cycles, indicated that we're in for 12-14 years of a rough period.

Posted by: eLwood | July 2, 2009 01:04 PM

What are the ethical and moral qualities of the management team that "hits the ground running?" And how are these qualities improved in bringing this entertainment venue to the good, kind people that dwell in the Ark? And what are the moreal and ehtical qualtiies of the organizations and their leadership that will recieve said benefits from this cash cow(?) and how and why will there be an impact? has anyone ventured a technology assessment of this business venture to the lifes and commerce of the 25th State of our Unioni?

Posted by: Bill | July 2, 2009 01:18 PM

Will people be able to set up automatic lottery ticket purchases via the web? The purchases could be paid for through automatic withdrawals from a checking account or automated charges to a credit card account.

If we have decided as a state to have a lottery, what would be wrong with making it as easy as possible for people to participate in the lottery?

In fact, why not go a step further, and just let people authorixe the state to withhold a specificed amount from their paychecks to purchase lottery tickets? If they win, the prize could be deposited directly into their checking account, like a tax refund.

For that matter, why fund only college scholarships with a lottery? Why not fund the entire state government with a lottery? Put all of our tax withholdings into the lottery, and let people decide how much they want withheld. This would make taxes completely voluntary. If it is a good mechanism for funding scholarships, then why would it not be a good mechanism for funding other state government functions?

It is absurd.

Posted by: A. Hugh Mann | July 2, 2009 01:18 PM

Why don't we pay all legislators and staff with lottery tickets? They are such big supporters of the scheme and such avid boosters of spending what ever it takes to make Ernie "Pass-me-the-Money" happy!

I'll bet the representatives, senators and staff would be falling all over themselves to accept this invaluable way to increase their salaries.

We could suggest it to Arnold and probably save California. Just pay the legislators and their staff in California lottery tickets. Or offer him Arkansas lottery tickets at a discount to pay the California legislators and state employees.

Lottery (ITYS)

Posted by: dottholliday | July 2, 2009 01:32 PM

eL- can we count the 8 years under George Bush's ineptitude/malfeasance/misfeasance/pure horse's ass and the 6 months Obama has had so far to start turning the ship of state in the right direction as 8 1/2 years of your 12-14 year economic cycle? Just wondering and hoping you'll answer in the affirmative.

Re our carpetbagger lottery director Mr. Ernie- I heard today he criticized folks who dared to question the wisdom of hiring some of his South Carolina cronies at $200K+/year as "Monday morning quarterbacks". Hey Ernie, you might want to wait until you've lived here at least 60 days before you start throwing hand grenades at the good folks of Arkansas. It is, after all, still our money until you find a way to pick our collective pockets. Seeing as how nobody knew the astronomical and absurd salaries you (Ernie) wanted to pay your two head cronies to run your gambling addiction enterprise, how could anyone know what was fixing to get rammed down our throats?

Let's see, if we pay carpetbagger Ernie based on job importance and since we pay the President of the U.S. $400K/year and since Ernie's job is worth maybe 1/2% (tops) that of the President's (I'm in a generous mood here), let's pay Ernie $2,000/year. And I absolutely love dottholiday's suggestion re payment in lottery tickets. Sheer brilliance, dott! We'll give our new friend Ernie the other $322,000/year of salary in lottery tickets. After all, if it's good enough for us little people it should be good enough for our new best friend Ernie. If Ernie refuses payment in lottery tickets, what does that tell the rest of us about 'investing' our money in lottery tickets?

Remember- in a Florida poll 20% of their Lotto players were counting on their Lotto winnings for their retirement. Good sound thinking, folks.

Posted by: Sound Policy | July 2, 2009 07:07 PM

All the talk from legislators and the Governor of paying for experience is BS. There are regular state employees all over State Government who have years of experience and skill sets that would be very hard and expensive to replace, but nobody is throwing money at them. Most of these people are the ones that got nothing from the new State Pay Plan that went into affect June 28.

I see in today's paper on legislator making a comment about people not minding that the UA pays Bobby Petrino 2.5 million, but that isn't our tax dollars paying most of that, a fact I'm sure this legislator knows, but it's better to ingrate himself with the new lottery chief.

Posted by: lrdemocrat | July 3, 2009 10:40 AM

Mr. Ernie says we ain't smart enough to understand why he and his 2 South Carolina carpetbaggers should be paid over $700k. Well, I am alert enough to understand a state employee doesn't have a $148k buyout. Does Mr. Ernie truly believe the people of AR should pay for this guy Barden's SC retirement? He pulled a fast one on the lottery commission and the legislators. When the three of them head to back to SC in a couple years with their suitcases stuffed with AR money, we'll be left to scratch our heads.

Posted by: killingmesoftly | July 3, 2009 12:24 PM

It is a mistake to want to be completely out of this sector.
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Posted by: Gold IRA | July 4, 2009 07:29 AM

Arkansas Blog

Lottery fast track

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