No instant winners

One of the redeeming features of playing the lottery, in this and other states, is the comforting thought that public education receives a share of the wagers. Unfortunately, the thought is more comforting than accurate, and it highlights the problems with relying on the various lotteries to be anything more than entertainment for the people who purchase tickets.

The Maine Taxpayers Action Network recently began to circulate petitions that both describe the problem and try to solve it by requiring the state to designate all of its lottery proceeds to fund education. It is an appealing idea, but it needs several safeguards to protect schools from the shortcomings of lottery revenues.

Money magazine last year looked at the effects of lotteries and came to three unflattering conclusions.

Lotteries are an extremely inefficient way to raise money. It is easy to forget that states got into the gambling business not to offer diversions to residents but to make money. Yet even the most efficient states pocket only about 40 percent of the total proceeds. The average take is 34 percent, according to Money, with Maine toward the bottom at 27 percent.

Lotteries have almost no effect on limiting tax hikes. Maine’s best year in the lottery business was 1994, when it sent $44.6 million to the General Fund. That is a lot of money, but compare it with the total budget ($1.8 trillion) or the annual revenue brought in from the added penny on the sales tax ($120 million).

Lotteries may not be friends to education. The average share of education spending for states with lotteries went down in the 1990s (Maine’s dropped from just over 50 percent to approximately 43 percent) while education spending in those states without lotteries increased slightly.

Maine’s lottery revenues go largely into the General Fund, with a little going to Inland Fisheries and Wildlife. The state share of the education funding comes from the General Fund. If lottery revenues or a portion of them were dedicated to education, it is safe to assume that an equal amount would be taken away from education’s General Fund source. That would not happen right away, naturally, but over time or in the next economic downturn or when another priority catches the eye of the Legislature, the temporary boon of the lottery funds would become an excuse for cutting other school sources of revenue.

That would leave schools dependent on the whim of lottery players, who in 1996 produced $3.5 million less for the General Fund than they did in 1995 and $7 million less than in ’94. School districts need — and property taxpayers deserve — fair, consistent funding of education. Without it, local taxpayers will be faced with the burden of continuing to carry more and more of the education’s costs. The lottery cannot change this growing disparity. The best it could do is provide a rainy-day account for education to prepare for the next recession.

Given the lengths to which the taxpayer’s union will go to get a measure on the ballot, don’t be surprised if its lottery question receives enough signatures. And don’t be surprised that, if passed, it fails to live up to expectations.