By Chris Fitzsimons
N.C. Policy Watch
The North Carolina Supreme Court will decide soon if the state lottery is a tax and if it is, the General Assembly violated the state constitution when it passed the lottery three years ago and will have to vote again if lawmakers want the state to remain in the huckster business.
The unlikely duo of Jack Holtzman from the N.C. Justice Center and Bob Orr of the N.C. Institute for Constitutional Law presented oral arguments to the court Monday, saying that the price of each lottery ticket includes a 35 percent tax, the share of the sale of each ticket that goes to the state.
The constitution requires that lawmakers vote on tax increases on two separate calendar days in the House and Senate, which wasn’t done three years ago as lawmakers bent several rules and broke a few more to pass the lottery.
Lieutenant Governor Beverly Perdue cast the tiebreaking vote in the Senate when two Republicans were absent, one recovering from an illness, the other on his honeymoon in Myrtle Beach, allegedly unreachable.
Senate leaders changed the rules and voted twice on the lottery on the same day, ignoring objections from several members, and subverting the normal legislative process. The court will decide if they also violated the constitution and must vote again and Orr and Holtzman have a persuasive argument.
When people buy alcohol at an ABC store, part of the price is a tax that goes to the state. Same for a lottery ticket. All of this could have been avoided if lawmakers had debated the lottery honestly, in the open, and held separate votes.
That might have made it even harder to pass though, and the drive in 2005 was to pass the lottery at all costs, not to respect the democratic process.
The lottery does include a tax and it is still a bad idea, despite all the press releases otherwise from lottery officials, touting the latest winners and the money raised for education, More-at-Four and college scholarships, more than $700 million to date.
People bought more than a billion dollars worth of tickets in the last fiscal year, roughly 60 percent of them instant scratch-off games, the rest on games with televised drawings held a few days later.
The announcements of the latest winner of a few hundred thousand dollars always come with a quote from the ticket holder about what he or she will do with the money, pay off bills, buy a house or car, pay for college for a child are common answers.
The news releases never mention what the thousands of people who didn’t win will do without the money they spent on lottery tickets, how they will pay for gas and groceries and rent. There’s nothing about the small crowd of people in the corner of convenience stories, scratching off ticket after ticket or the folks who stop by on the way home from the factory or the mill every payday and buy tickets that never match the numbers drawn on television before the 11 o’clock news.
They are there though, or at least their money is. That’s where the state gets its share of the exploitative lottery, misleading people into thinking the lottery is an answer to their financial struggles and taxing a third of the ticket they buy.
Members of the Lottery Oversight Committee concluded recently that it looks like lottery revenue is supplanting money already spent on education and More-at-Four, not providing new funds.
That’s still worthy of a thorough debate in the General Assembly, one that we didn’t have in 2005. So is the effect of the lottery on people in the state who cannot afford to play but whose participation is vital to the lottery meeting its revenue projections and saving the politicians from a discussion about how to raise money honestly and fairly.
The debate is coming if the court agrees that a lottery ticket includes a tax. The constitution requires it and the people deserve it, especially the ones desperately scratching away.
Chris Fitzsimons is executive director of the Raleigh-based N.C. Policy Watch