N.C. to have lottery, thanks to budget deal

The Charlotte Observer
Mark Johnson

RALEIGH - North Carolina would start a lottery, advertise it and spend the profits on teachers, school buildings and scholarships for the needy under a final budget plan worked out by House and Senate negotiators Friday.

The compromise between House and Senate plans for a lottery virtually ensures that North Carolina will start a state numbers game during the next year. The lottery was the last disputed issue between the House and Senate in budget negotiations.

The lawmakers, said Senate Majority Leader Tony Rand, even included a special lottery rule: No ticket may feature the likeness of any current or former elected official.

Lawmakers likely will get a copy of the compromise budget by Monday evening, and House Speaker Jim Black promised members a day to digest the phonebook-size document. Under that schedule, the budget would be up for the first of two votes in each chamber on Wednesday. The $17 billion-plus spending plan is more than a month overdue.

"It's something we think will be acceptable to a majority" of the legislature, said Rand, a Fayetteville Democrat who helped forge the lottery deal.

Under the lottery plan, no more than 1 percent of revenue can be spent on advertising, and the ads must avoid themes that appeal to children. The odds of winning must be clearly publicized. The odds of winning, for example, South Carolina's "Hot Lotto" grand prize are 1 in 11 million, while the Powerball grand prize odds are 1 in 120 million.

Five percent of proceeds goes toward creating a $50 million reserve fund in case lottery revenues dip. Of the remaining money, 50 percent goes to reduce class sizes in elementary schools and fund the state's pre-kindergarten program, 40 percent pays to build new schools and 10 percent bankrolls college scholarships for the poor.

The Senate will still have to take a separate vote after passing the budget to actually enact the lottery. It will take several months to appoint a lottery board, hire a director and staff and start operations.

"It's not likely any tickets will be sold this calendar year," Rand said.

The budget would increase the cigarette tax from a nickel a pack to 30 cents per pack on Sept. 1 and to 35 cents per pack next July 1. The boost means North Carolina will shed its status of imposing the lowest tax on smokes in the nation and will pass that title to South Carolina, which charges tax of 7 cents per pack.

Senate leaders argued for taking the tax to 40 cents per pack this year, but a group of tobacco country Democrats in the House tamped down that figure.

The tax on liquor, satellite TV, telephone service, cable TV and candy bars rises to 7 percent (7.5 percent in Mecklenburg) to help create a more uniform tax rate and join a state-to-state effort to tax Internet sales.

Most of those goods and services are currently taxed at 5 percent or 6 percent.

State employees would get a 2 percent pay raise or $850, whichever is greater, plus an extra week's vacation. Teachers would receive 2.24 percent, though Gov. Mike Easley would have the power, after consulting the legislature, to raise their salaries further. Democratic leaders said they are trying to address the state's failure to keep up with the national average on teacher pay after working for several years to get there.

"We've slipped somewhat," said Sen. Kay Hagan, a Greensboro Democrat and budget committee chair.

Other key components of the budget include:

# UNC Chapel Hill and N.C. State University will not get authority to independently raise their tuition. A Senate proposal let them bypass the UNC system board of governors.

# Corporations and the state's top income earners do not get a tax cut, as the Senate originally proposed.

# UNC Charlotte gets $5 million this year and $10 million next year toward establishing a doctoral program. Johnson & Wales University gets another $1 million, for a total of $3 million, toward the $10 million they were promised for opening a campus in Charlotte.

# Kindergartners will be required to get an eye exam before starting school, and the state will provide $2 million for children not covered by insurance or government programs.

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