Lottery cuts will decrease local aid

Treasurer critical of Baker, lawmakers


STATE LOTTERY OFFICIALS say budget cuts ordered by Gov. Charlie Baker and the Legislature to close a mid-year budget shortfall will cut gambling profits by $35 million over the next year and a half and result in less local aid for cities and towns.

“All the conversations about cuts have said it will have no impact on local aid. This is local aid,” Treasurer Deborah Goldberg said. “I’m concerned about this and hoping to speak with people in the Legislature.”

Goldberg and Lottery Executive Director Beth Bresnahan briefed the Lottery Commission Tuesday on the impacts of the $1.7 million cut made in February to the Lottery’s $97 million budget.

Bresnahan said the Lottery is canceling three instant tickets scheduled for release later this year, costing the state $12.4 million in profits in fiscal 2015 and another $22.5 million in fiscal 2016.

With over 70 percent of Lottery sales coming from instant tickets, officials said net profits for the budget year that ends on June 30 are now expected to total $935.4 million, down from $947.8 million.

Baker and leaders in the House and Senate made a point of showcasing how the state’s direct appropriation for local aid would not be cut as part of the plan to close a $768 million mid-year budget gap. But Goldberg and Bresnahan said the cuts to the Lottery will also reduce local aid distributions.

Based on the emergency budget cuts this year, Bresnahan said, the Lottery has downgraded its profit projections for fiscal 2016, which is the largest single source of local aid revenue, from $920 million to $897.4 million.

The new treasurer said she hopes to speak with House budget chief Rep. Brian Dempsey and Senate Ways and Means Chairwoman Karen Spilka about making sure the Lottery isn’t level funded at its post-cut budget, which could further erode profits.

“If the conversation is we don’t want to impact local aid and local communities and we want to hold them harmless, sometimes I think the connection is lost,” Goldberg said.

Bresnahan said the Lottery planned to trim $1.3 million from its administrative budget, which includes printing costs for a $1, $2, and $5 instant scratch tickets. The agency also cut $138,000 for planned technology upgrades, $100,000 from its advertising budget, and $300,000 for KENO and Jackpot Poker, costing a potential $12 million in lost KENO revenue.

[In an interview with CommonWealth after the commission meeting, Bresnahan said she did not consider layoffs in wielding the ax, insisting the agency’s nearly 400-employee workforce with a $31 million budget is “one of the leanest staffs we’ve had in over a decade.”

The agency is also cutting just $100,000 from its advertising budget despite a $3 million increase over last year, going from $5 million to $8 million. Bresnahan said with just five months remaining in the fiscal year, just $430,000 remains in the ad budget, some of which is needed to promote new games coming out in March and April.

Lost in the presentation to the commission was the projection that local aid next year will already be about $27 million lower than this year’s initial projection, even before the estimated lost revenue is factored in. Bresnahan said that is a factor of higher payouts from higher-priced instant tickets as well as a planned $20 million payout for Megacash, a long-dormant $20 instant ticket. That prize money was never set aside for the jackpot while the game was being sold and has to come out of current sales to pay for it.]

Tim McMahon, a Lottery commissioner, shared Goldberg’s and Bresnahan’s concerns about having to cut back on advertising games and jackpots.

“If you don’t market, you don’t generate sales. Plain and simple,” he said.

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Matt Murphy

State House News Service
Lottery sales in January were up $18 million over the same month last year, with instant tickets accounting for $7 million of the growth. Sales just last week, however, were down $10 million from 2014 and Bresnahan said there is concern over how badly the continuous snowfall of the past three weeks will impact overall sales in February as people hunkered down at home and had their normal routines disrupted.

“Obviously, we’re going to be concerned about February. It’s going to be a tough month,” Goldberg said.