Lottery on pace for record year

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After several years in the doldrums, Lottery revenue has risen sharply over the past several months, with fiscal 2012 shaping up as a possible record-setting year.

On April 5, State Treasurer Steven Grossman, chair of the State Lottery Commission, announced that the estimate for profits in fiscal 2012 was being increased to $936 million, up $42 million from the $894 million included in the original fiscal 2012 state budget act. Based on revenue collected through the end of March, the trend is for profits to exceed this new estimate and maybe reach a historic high.

According to Grossman, the surge in revenue is due to “an improved portfolio of games,” a new approach to promotions, a mild winter that didn’t discourage people from venturing out to purchase Lottery products, and a historic multi-state MegaMillions jackpot that began in January and grew to $656 million by April.

The MMA is calling on the House and Senate to use the higher-than-expected Lottery proceeds to increase the Unrestricted General Government Aid (UGGA) account to help pay for municipal services and reduce reliance on the property tax, as provided in state statute.

The fiscal 2013 state budget bill adopted by the House on April 25 includes a Cherry Sheet UGGA distribution of $899 million, which reflects the expectation of higher Lottery revenue next year.

After accounting for routine transfers of Lottery profits to the state’s General Fund, the new profits estimate would provide $854 million for distribution to cities and towns this year through the UGGA account and an equal amount next year even if profits do not grow.

The governor’s fiscal 2013 budget recommendation includes only $834 million for the UGGA account, allowing at least $20 million that was intended for cities and towns to flow to state coffers for other purposes.

Since fiscal 2008, the year before the 2007-2009 recession began, state funding for the main Cherry Sheet municipal aid accounts has dropped from $1.3 billion to $834 million this year. These accounts were identified as Lottery and Additional Assistance until fiscal 2009, when they were combined and renamed Unrestricted General Government Aid.

In fiscal 2008, state tax revenues contributed almost $500 million to these municipal aid accounts – as a form of revenue sharing - with the balance of $824 million coming from Lottery profits. By the end of this year, it appears that all of the revenue sharing will have been eliminated, leaving UGGA funded solely by Lottery profits.