Missouri House eyes cut to Lottery ad funding
Wednesday, March 9, 2011
A Missouri House budget proposal released Tuesday would eradicate much of the money available to advertise the state lottery — a move critics say could also have a negative impact on funding for education.
The proposal from the House Budget Committee would reduce the Missouri Lottery’s advertising budget from $9.3 million this year to $1 million during the 2012 fiscal year that begins July 1. The balance would be transferred to an education fund, where a portion of the lottery’s proceeds already goes.
Lottery Director May Scheve said a reduction in advertising would result in fewer lottery sales, leading to an estimated $24 million loss for education funding. She said the lottery is projected to send $259 million in proceeds to schools this year, but that the amount would fall to $235 million next year if the House approves the cut.
“It will directly impact the dollars that go to the state’s schools,” Scheve said of the proposed cut.
Other committee members also expressed concern.
“It’s not fair to cut their advertising budget and expect them to increase” the revenues transferred to education, said Rep. Dwight Scharnhorst, R-St. Louis.
But House Budget Committee Chairman Ryan Silvey, R-Kansas City, said he does not think the proceeds for schools would decrease as much as Scheve projected.
The lottery received about $1 million for advertising in 2010 fiscal year and generated about $250 million in school proceeds. He said the lottery should be generating much more money this fiscal year, since it received a boost in its advertising funding to $9.3 million.
“It seems to me that instead of doing more with less, you’re doing less with more,” Silvey said to Scheve, a former state lawmaker and former chairwoman of the Missouri Democratic Party.
Scheve said the lottery had been able to generate a higher rate of return on its advertising dollars in past years because it spent them to promote Powerball jackpots. She said the lottery is now promoting “scratcher ticket” games, which require more money to be spent on advertising to sell each ticket.
She also said it might be much harder for the Missouri Lottery to sell tickets in the coming fiscal year because it will face increased competition from lotteries in Arkansas and Illinois in cities on Missouri’s borders. She also said recent increases in gas prices might result in lower sales as at gas stations.
Both of those factors would mean the lottery wouldn’t see as much return on advertising dollars because it will have to spend more money to sell each ticket.
The lottery’s funding is included in a budget bill for the Department of Revenue. The committee is reviewing proposed budgets for all departments this week and is expected to debate amendments to those proposals next week.