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Easley Officials: Lottery Money Will Replace Some School Spending

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RALEIGH, N.C. — About half the revenues from the $400 million that a new lottery is expected to generate in North Carolina will replace current education spending, Gov. Mike Easley's administration says.

That isn't what many were expecting after legislators said repeatedly last year they wanted lottery money used to increase education spending, not replace it.

"There is a pretty big disconnect, I do believe, between what is the public perception and what the actual legislation allows about the uses of lottery revenue," state Auditor Les Merritt said.

State budget planners said in a recent presentation to debt-rating agencies that $210 million of lottery proceeds will replace money now going to the pre-kindergarten More at Four program and to reduce class sizes in kindergarten through third grade.

The governor says it's time to use that money elsewhere.

Easley fiscal adviser Dan Gerlach said a big part of the freed-up cash will help pay to increase teacher salaries to the national average.

When Easley signed a lottery bill into law Aug. 31, the measure promised the gambling proceeds would add to and not replace existing school revenue. But the state budget Easley had signed two weeks earlier overrode the pledge that lottery profits would only add to current education spending.

"In all likelihood, the public was hoodwinked," said Elaine Mejia, director of the N.C. Budget and Tax Center in Raleigh, which opposed the lottery. "If the governor had said this will support education programs already in place, I doubt it would have passed."

Mejia has long argued that it's hard to show that lottery funding boosts education spending. In other states with lotteries for education, general tax funding for schools dropped over time.

"We warned that it wouldn't be new money," she said. "Will the money go for a tax cut? Better state employee pay? More prisons? We will never know."

Easley officials said they will show at budget time this spring where the extra money they are freeing up from current programs will go.

Late Tuesday Easley issued a statement about the issue.

"Education lottery money will supplement, not supplant existing spending for education and I will not recommend nor sign legislation that reduces the state's spending for education," Easley said.

"Since 2001, when we began pre-k and class size reduction efforts, I have consistently said that once an education lottery was enacted, we would use the proceeds to fund these priorities permanently. The lottery will always be the source of funding for these programs in good and tough economic times. In addition, the education lottery funds college scholarships and school construction as provided by law."

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