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Story last updated at 6:59 a.m. Monday, April 21, 2003

Don't overestimate lottery revenue

Many members of the General Assembly understandably welcomed the lottery commission's recent upward revision in its estimate of lottery revenue for the 2003-04 budget year. But the extremely tight squeeze that already was the state budget got even tighter Wednesday when the S.C. Board of Economic Advisers refused to approve that increased estimate of how much money the lottery will generate.

Six weeks ago, the BEA had estimated $181 million of lottery revenue. And despite the subsequent lottery commission projection of $195 million, the BEA is sticking with its original figure.

Though that makes lawmakers' tough budgetary task even tougher, the BEA is correct to stick with the more conservative estimate. Assuming best-case financial scenarios is not a responsible way to allocate government funds. Part of the blame for the current budget mess can be placed on overly optimistic projections of overall revenue levels last year.

BEA Chairman John Rainey explained, in a letter to Senate Finance Chairman Hugh Letterman, R-Florence: "Our analysis indicated that once the inordinate effects of last December's super jackpot wear away, proceeds from the lottery are expected to fall in line with our estimate."

Sen. Leatherman told The Associated Press: "Obviously that hurts. We're looking to see if there is some way to restore money to education."

Yet it would be a mistake to "restore money" from anticipated funds that the BEA isn't reasonably certain will be available. It also would be a mistake to ignore the experiences of other states which have learned the hard way that over time, lottery revenues don't always meet projections of continued growth.

At least BEA member Don Herriott offered this encouraging possibility: Current trends show that the lottery might finish the current fiscal year with from $10 million to $25 million more than the $172 million that had been anticipated. If that pleasant outcome occurs in mid-May, the General Assembly can make good use of that windfall during final conference committee work on the budget.

And if the lottery commission's projections for the 2003-04 revenue are confirmed by the eventual revenue received, the General Assembly can make good use of that windfall, too. However, for now, the BEA has acted prudently by sticking to its original lottery estimate until it's proven inaccurate.

Better to err on the side of expecting less money than the lottery will actually provide than on the side of expecting more.








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