Legislation axing the Arkansas Lottery Commission and requiring the governor to appoint the lottery director easily cleared an Arkansas House committee Wednesday.
In a voice vote with no dissenters, the House Rules Committee recommended that the House approve Senate Bill 7 by Sen. Jimmy Hickey, R-Texarkana, after Hickey explained the 83-page bill's major provisions and answered a few questions from committee members. No one testified for or against the measure.
The bill would disband the Lottery Commission and transfer its powers, duties and responsibilities to a newly created Office of Arkansas Lottery in the state Department of Finance and Administration's Management Services Division.
The measure includes an emergency clause so that if at least two-thirds of the 100-member House approve the bill and Republican Gov. Asa Hutchinson signs it into law, it goes into effect immediately. The Senate voted 34-0 to approve the measure Feb. 11.
House Speaker Jeremy Gillam, R-Judsonia, said SB7 has wide support in the House, which will vote on the measure next week.
Hickey, a critic of the lottery, told the House Rules Committee that he wants the lottery and the finance department to work together "in some type of methodical nature so we don't hurt the sales of the lottery."
But House Rules Committee Chairman John Vines, D-Hot Springs, wondered if the finance department is "prepared for this responsibility."
Hickey replied, "Yes, sir."
Vines added that "I am sure [the bill] wouldn't have gotten got this far without that. But I always make sure when you ask for something you know what you are getting."
Hutchinson supports SB7 and the finance department is prepared to accept the lottery "once the Legislature makes that decision," Hutchinson spokesman JR Davis said after Wednesday's vote.
"There is not an immediate plan to make any changes to personnel," Davis said in response to a question about whether the governor has decided who he wants to run the lottery. Bishop Woosley has been director since February 2012.
Hutchinson said in July that he favors making the lottery accountable to the governor's office. Last month, he said it would be better for the lottery to be placed in the finance department instead of the state Higher Education Department as Hickey initially proposed.
Internal auditors at the finance department said they have identified eight employees among the lottery's 72, whose duties could be transferred, saving more than $400,000 a year. A department official told lawmakers last week that it would be premature to make personnel decisions until more research has been done.
Annual salaries for the lottery's budgeted employees total nearly $4.2 million, according to a fiscal 2015 budget submitted to the Legislature last year.
The lottery started selling tickets Sept. 2, 2009, but it has experienced dwindling sales and net proceeds for college scholarships during the past two fiscal years and the first seven months of the fiscal year that started July 1.
Arkansas Academic Challenge Scholarships are financed through the lottery's net proceeds, plus $20 million a year in state general revenue. There's also a $20 million lottery reserve fund used to deal with temporary cash shortfalls.
More than 30,000 students have received these scholarships during each of the past five fiscal years.
The Legislature has twice cut the scholarship amounts for future recipients, in part because the net proceeds have fallen short of initial projections.
The games raised $94.2 million for scholarships during the first full fiscal year, 2011. Proceeds climbed to $97.5 million in fiscal 2012 but dropped to $90.3 million in fiscal 2013. In fiscal 2014, they fell to $81.4 million.
In August, Woosley projected that the lottery would raise $78.2 million for scholarships in fiscal 2015. But former state Department of Higher Education Director Shane Broadway and Hickey have said the lottery is expected to raise roughly $73 million for scholarships in the fiscal year ending June 30.
Woosley said Wednesday that he'll decide whether to change his forecast after final figures on Februarysales and net proceeds.
Hickey's SB7 would cap the lottery director's potential pay at $212,404. Currently, the maximum, if authorized by the oversight committee, is $354,007.
The first director, Ernie Passailaigue, was making $326,832 when he resigned in September of 2011; Woosley makes $165,000 per year.
Woosley reiterated Wednesday that the structure and governance of the lottery commission is within the discretion of the Legislature and the commission isn't taking a position on the bill.
The commission is made up of three appointees apiece from the governor, House speaker and Senate president pro tempore under the lottery law enacted in 2009.
Commission members are John "Smokey" Campbell of Hot Springs, Julie Baldridge of Little Rock, Bruce Engstrom of North Little Rock, Dianne Lamberth of Batesville, Raymond Frazier of Little Rock, Doug Pierce of Jonesboro, Mark Scott of Conway, George Hammons of Pine Bluff and Alex Streett of Russellville.
Lottery foe Jerry Cox, who is president of the Family Council, said SB7 "is definitely an improvement" in his mind.
"Unfortunately, almost everything we said bad about this whole lottery process came true, so I think this is a good first step toward fixing a number of the problems, primarily this will give us much greater transparency," Cox said.
"No state has ever repealed a lottery in the modern era and I don't expect Arkansas to be the first, unfortunately," Cox said.
He said he expects that the money raised for scholarships will remain pretty flat, with the governor supervising the lottery.
Cox said the finance department several years ago projected the lottery would raise about $55 million a year for the scholarships and "I believe those numbers were much more accurate than most people believed.
"I think if you just kind of let it do its thing, bottom out, do whatever, that's about where it is going to land," he said.
Former Lt. Gov. Bill Halter, a Democrat from North Little Rock who led the campaign to persuade voters in 2008 to approve Amendment 87 to authorize the General Assembly to create the lottery, and Passailaigue estimated about $100 million a year would be raised for the scholarships.
Information for this article was contributed by Claudia Lauer of the Arkansas Democrat-Gazette.
Metro on 02/19/2015