Alabama Lottery Is Out For Now

Even though the saying goes that “without Atlanta, we’d be Alabama,” the Peach State still has some major differences with its western neighbor. We have more teeth, we smell better, we wear shoes, etc. Less obvious is that, like most other states, we have a lottery and, despite Gov. Robert Bentley’s best efforts last week, Alabama still does not.

Gov. Bentley called the Alabama State Legislature into a special session this month to address the state’s Medicaid funding shortfall. There are about 1 million Alabamians on Medicaid, half under the age of 17. For the last few years, Gov. Bentley has been working on a reform plan that would move Medicaid into a managed care program that uses regional care organizations to deliver services. He says that this will slow the growth of Medicaid spending and save taxpayer money. His plan was dealt a blow earlierthis year when legislators passed a budget that appropriated $85 million less than what he requested for Medicaid. The special session was called so that the governor and the legislators could find a way to close the gap.

The key proposal the governor put forward was a constitutional amendment to authorize a state lottery. Alabama has a troubled history with lotteries. In 1999, voters rejected Gov. Don Siegelman’s lottery proposal, which would have funded college scholarships and technology in secondary schools. Gov. Bentley’s office estimated that a lottery would bring in around $225 million a year to the general fund. Under his proposal, the first $100 million would be earmarked for Medicaid. A constitutional amendment needs a 3/5 vote in each legislative chamber to pass and would then have to be ratified by a majority of voters via a ballot referendum.

After initially passing the Senate 21 to 12, the bill ran into trouble in the House. Republicans holding swing districts took advantage of House procedures to delay the vote past Aug. 24, which was the deadline for the amendment to appear on the general election ballot in November. These members were concerned that the lottery amendment would boost Democratic turnout and possibly cost them their seats, so they instead opted for a special election (which could cost up to $8 million). Things got even more hectic the next day as the House debated and amended the bill for 11 hours before taking a late night vote on it. The first vote (which was called at 10:30 PM) failed, causing Democratic Rep. Mary Moore to take to the floor and “question the intelligence of those who voted ‘no.’” After an hour of arm-twisting, the vote was called again and it passed 64 to 35, just one vote above the 3/5 threshold.

When the amended House version returned to the Senate, it ran into opposition from Democrats who, along with moderate Republicans, were the core of the 21-member coalition that originally passed the bill. The House amended the bill so that “lottery” was only defined as paper tickets. The Senate Democrats said this was a deliberate move by the House Republicans to limit the expansion of electronic gambling. Moreover, there were rumors that the Poarch Band of Creek Indians, who already operate reservation casinos in Alabama, were negotiating a compact with Gov. Bentley. This compact might have allowed the Poarch Band to have a monopoly on electronic gaming, preventing the state from installing casino machines at greyhound dog racing tracks. Gov. Bentley denied that he had been negotiating such a compact. In any case, the Senate voted to nonconcur with the House version of the bill 23 to 7, effectively killing it.

Despite the death of the lottery bill, there could still be some relief for Medicaid funding when the legislature reconvenes on Sept. 6 and completes the final three days of the special session. The House passed a bill that takes the $1 billion the state received in its settlement with BP from the Deepwater Horizon oil spill and gives about $35 million to Medicaid. Gov. Bentley is already sitting on another $35 billion from a previous BP settlement payment. Together, these payments would nearly cover the cost of his reform plan.

This idea might catch traction as many want the state to fill the funding shortfall without resorting to a state lottery. Many conservatives oppose gambling on moral and religious grounds while liberals argue that state lotteries are regressive taxes which disproportionately burden people with lower incomes. The Alabama plan might sit a little better with liberals because the revenue ultimately goes back into Medicaid which helps the poor. However, they are less enthusiastic about lotteries funding college educations for the children of middle and upper class parents, like Georgia’s HOPE scholarship.

Speaking of Georgia, our own state leaders are probably crossing their fingers that the Alabama state lottery does not come up again. Researchers from the Rockefeller Institute of Government say that an Alabama lottery would cut into Georgia’s revenues as many Alabama gamblers currently cross state lines to try their luck. Losing their business would put even more pressure on legislators to find a way to replenish the HOPE scholarship fund, which will face shortfalls in the next decade if no cost-saving or revenue-boosting measures are taken.

But regardless of one’s feelings on the state lottery, Alabama is in a tough spot now that the bill is dead. They are without a long term fix to their funding gap as the BP settlement payments will not continue indefinitely. If the legislature continues to oppose tax hikes, the money to cover the shortfalls will have to come from somewhere else, possibly education funding cuts. Alabama is already in dire straits as it was recently ranked as the eighth worst state in the country to live in. Even though Georgians might enjoy looking good by comparison, we should still root for a change of fortune for our long troubled neighbor.