Governor inks bill trimming lottery outlays

Sponsor says new law saves $600,000 for scholarships

Arkansas Gov. Asa Hutchinson signed legislation Wednesday to eliminate the Arkansas Scholarship Lottery's $200,000-a-year contribution to compulsive gambling treatment and education programs, increasing the amount of money available for scholarships.

Senate Bill 404 -- sponsored by Sen. Alan Clark, R-Lonsdale -- also reduces the lottery's payments to the state Department of Higher Education for administering the lottery-financed Arkansas Academic Challenge Scholarship program to "only direct expenditures of the department to administer scholarship funding."

Clark said the new law ensures the lottery isn't paying for indirect expenses.

Clark said he expects the law will raise as least $600,000 more a year for the Arkansas Academic Challenge Scholarship program by axing the lottery's payment for problem-gambling programs and cutting the lottery's payments to the Higher Education Department by $400,000 a year.

Lottery Director Bishop Woosley said the lottery paid the department $751,556 last fiscal year for administrative expenses, compared with $794,015 in fiscal 2013, $846,108 in fiscal 2012 and $1.17 million in fiscal 2011.

Harold Criswell, deputy director for the Higher Education Department, estimated the department will lose between $275,000 and $350,000 a year from payments from the lottery under the measure.

Clark introduced the bill Feb. 17. It dashed through the Senate on March 25 in a 34-0 vote and the House of Representatives on April 2 in a 79-2 vote, with only Little Rock Democratic Reps. Fred Love and John Walker voting against it.

Clark said he introduced the bill at the request of a former Arkansas lottery commissioner who thought the lottery's spending on some programs was being wasted and should go to scholarships instead. He declined to identify the commissioner who sought the change.

Former Arkansas Lottery Commissioner John C. "Smokey" Campbell of Hot Springs frequently complained about the lottery's payments to the Higher Education Department for administering the scholarship program and to the Division of Legislative Audit for auditing the lottery.

Campbell could not be reached for comment by telephone Wednesday afternoon.

Clark said he expected "some kind of outcry" about the elimination of the lottery's $200,000-a-year contribution to problem-gambling programs, but it didn't materialize.

"No one ever contacted me. No one ever came to a committee [meeting] to oppose it," he said. "I thought all along it would have to come out [of the bill]."

He said the lottery financed a problem-gambling hotline that didn't receive many phone calls from Arkansans, and he didn't talk to anyone who thought the hotline "was doing any good."

The lottery also funded various groups in Arkansas that combat problem gambling, Clark said.

"I know there are gambling problems, but it does not seem to be addressing them," he said. "We might need to do something about problem gambling in the future."

Family Council President Jerry Cox, who is an opponent of the lottery, said his group "is neutral regarding the elimination of the $200,000 to fund a problem gambling hotline.

"The meager $200,000 per year being spent on the gambling hotline is an insult to the real problem of gambling addiction," Cox said in a written statement.

"The lottery, Oaklawn and Southland [racetracks] need to be required to put millions of dollars into a comprehensive program that really addressed the problems that their industry creates. Some of that money needs to be used to educate young people about how unwise it is to gamble in the first place. The amount of money being spent on this problem is a drop in the bucket, so if they're not willing to put real money behind really addressing the problem, why bother? Anything less is just window dressing."

Officials at Oaklawn Park in Hot Springs and Southland Park Gaming and Racing in West Memphis could not be reached by telephone for comment about Cox's remarks Wednesday afternoon.

The $200,000 a year from the lottery has been spent on the gambling hotline, comprehensive outpatient treatment and services, and the establishment of a prevention and education program to increase public awareness about gambling problems through community-based specialists and organizations, said state Department of Human Services spokesman Amy Webb.

The department paid the Louisiana Association on Compulsive Gambling $16,069 to operate the problem gambling hotline in fiscal 2014, she said.

"We will no longer operate a gambling hotline," Webb said.

A spokesman for the Shreveport-based Louisiana Association on Compulsive Gambling could not be reached for comment by telephone on Wednesday.

According to reports on the Arkansas lottery's website, the "problem gambling helpline" reported receiving several hundred phone calls each month during the past year.

In February, the hotline reported receiving 786 phone calls, including 296 calls about the lottery, 223 calls about casinos, 129 calls that were "hang ups" and 119 in which callers dialed the wrong number.

Clark said he amended a provision out of his bill that would have required the Division of Legislative Audit to audit the lottery for free, after some lawmakers and division officials objected.

The lottery has paid the audit division more than $700,000 during the past three fiscal years, including $325,720 for auditing lottery draws. "As of February we are no longer involved in lottery draw observations," said Deputy Legislative Auditor Jon Moore.

Sen. Jimmy Hickey, R-Texarkana, said lawmakers "just see [the new law] as another avenue to correct" the scholarship program's "deficit spending" when it temporarily taps its $20 million lottery reserve fund. The fund is designed to help the program through temporary cash-flow shortfalls.

The scholarship program is financed through the lottery's net proceeds as well as $20 million a year in state general revenue.

More than 30,000 students have received these scholarships during each of the past five fiscal years. Before this year, the Legislature twice cut the size of the scholarships for future recipients.

This year, lawmakers voted to cut the size of the scholarships for first-year college students and increase them for second-year college students, starting in the 2016-17 school year, and to change the eligibility requirements at the same time.

The lottery's ticket sales and net proceeds have dipped each of the past two fiscal years, leading the Republican-controlled Legislature to eliminate the Arkansas Lottery Commission and shift control of the lottery to the Hutchinson administration. That law took effect in late February.

Metro on 04/09/2015

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