State aims to boost lottery sales to plug holes in budget - Tucson Local Media: Pima Pinal

State aims to boost lottery sales to plug holes in budget

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Posted: Tuesday, July 15, 2008 11:00 pm

State lawmakers are betting on gamblers to help balance the state budget.

Earlier this month, the Legislature approved a nearly $10 billion spending plan that, in part, pegs the state’s solvency to increased sales of lottery tickets.  

Lottery officials plan to increase sales by advertising more and circulating more ticket-vending machines. The additional sales will help pay for new buildings and repair dilapidated ones throughout the Arizona university system.

The problem some have with connecting the universities’ needs with lottery sales stems from a belief — backed by many studies — that the people most likely to play the lottery are those who can least afford it — the working poor and unemployed.

“The people who can least afford to pay, play the lottery — but it’s a choice to play,” said Pete Hershberger, Republican representative for Legislative District 26 and a candidate for the State Senate.

State lottery officials have said lifting the cap on the amount they can spend on advertising could create up to a 23 percent boost in sales.

That could translate into an additional $50 million in profits, bringing the state’s take to $190 million annually.

State officials want lottery money to help finance $1 billion in bonds that will pay for building projects at Arizona’s three public universities.

According to many academics, though, state-run gambling is the equivalent to a regressive tax, one that unduly burdens people at the lowest economic rungs.

A 2005 study in the scholarly journal Social Science Quarterly said states that introduced lotteries had noticeable increases in income inequality after gambling was approved.

“All else equal, states with lotteries have much more unequal income distributions than states without lotteries,” wrote the study’s authors, University of Maryland Professor Irwin Morris and graduate student Elizabeth Freund.

The authors analyzed lottery and economic data from all 50 states covering a span from 1976 to 1995.

“It is regressive,” Hershberger said.

The state senate hopeful said he voted for the lottery measure as a portion of the state’s budget package because it was an all-or-nothing vote.

Voting against the budget bills because of the lottery provision would have been a vote to shut down state government, Hershberger said.

A comparison of lottery sales and percent of people living under the poverty line by ZIP code in the Tucson area reveals a mixed bag of facts.

For example, residents older than 21 in the 85742 ZIP code, which includes parts of Oro Valley, Marana and Pima County, spent an average of $26 on lottery tickets in fiscal 2008, the least per person in all of Tucson.  

That same area has one of the lowest poverty rates (3 percent) in metropolitan Tucson.

Conversely, 30 percent of residents in the 85714 ZIP code, which includes portions of Tucson south of Ajo Way, live below the poverty threshold, according to U.S. Census figures.

Arizona lottery data shows that the average residents there spent $241 on lottery tickets in fiscal 2008.

But figures from other ZIP codes were less cut-and-dried, showing some areas with high levels of poverty spending little on the lottery and other, more-affluent areas spending more.

Lottery sales in the Tucson region accounted for more than $56 million of the roughly $473 million statewide total in fiscal 2008.

Still, state officials say the Arizona Lottery performs poorly when compared to other states.

“This is an underperforming lottery,” said Nancy Young Wright, a Democratic representative from LD-26, the area covering Oro Valley.

Arizonans on average spend about $76 a year on lottery games, according to sales figures.

In Massachusetts, for example, residents in 2007 spent more than $700 each.

Young Wright also noted that the lottery has a problem gambler program that provides counseling for people with gambling addiction issues.

She and Hershberger, though, concede that this year’s budget process left lawmakers with few good choices to try to fill an estimated deficit of $2 billion.

“I’m satisfied that we did the best that we could this year,” Young Wright said.

Her Republican House colleague shared her tepid enthusiasm, saying of the lottery provision, “It’s not my preferred funding mechanism.”

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