February 17, 2007
Gov. Rick Perry’s proposal to sell the state lottery is so entangled with political insiders and its projected payoff so iffy that the idea has to be examined skeptically.This week, Perry made the proposition personal, bringing in his family’s history with cancer and taking umbrage at critical comments. Texans can sympathize with the governor’s personal distress — most people have been or will be touched by cancer in some way — and still doubt the wisdom and efficacy of privatizing the state lottery.Perry’s reasoning is sound enough: Texas ought to have a trust that funds medical research and health insurance for the poor. Texas has more residents without health insurance than any other state. But selling the lottery may not be a wise way to provide for that trust.Several other states are considering selling their lotteries to quickly get billions of dollars for special projects. Lottery sales are part of a trend of selling off government assets to private operators, but no state lottery has been sold to a private business yet.Perry estimates the lottery would bring in between $14 and $20 billion, and the interest on that money would fund schools, cancer research and health insurance for the poor. Not coincidentally, selling the Texas lottery — the country’s third largest — also would make tens of millions of dollars for the brokers.Where would it leave Texas? The lottery earns about $1 billion a year for schools, a sizeable part of the $13.2 billion the state annually provides for education. Under Perry’s proposal, the trust established for education would provide $800 million a year, $200 million less than the lottery gives now.Perry said the trusts would bring in $300 million more a year than lottery ticket sales, but he is asking a lot more of that money — if it actually amounts to as much as the governor says.Critics argue that the $800 million figure for education is suspect because it is based on a 9 percent interest rate, which some say can’t be maintained year in and year out. Skeptics include state Rep. Warren Chisum, R-Pampa, chairman of the House Appropriations Committee.State Sen. Kirk Watson, D-Austin, said there is much to learn before even considering selling the lottery. “What do we have to lose?” asked Watson, a cancer survivor. State Rep. Dawnna Dukes, D-Austin, said the idea was a surprise that needs careful scrutiny.The way the lottery sale proposal came about is disturbing as well. It’s being pushed by former U.S. Sen. Phil Gramm, a Republican mentor of Perry’s who is vice president of UBS, a financial services firm hoping to broker the sale of the lottery. Gramm’s political action committee once gave $610,000 to Perry’s campaign.UBS also hired Perry’s son, Griffin, 23, last month to work in its Dallas office. Former Perry spokesman Ray Sullivan is a lobbyist for UBS, and Perry’s deputy chief of staff, Phil Wilson, spent most of the 1990s working for Gramm.It’s mere coincidence, say all involved, and has nothing to do with Perry’s proposal, since neither Griffin Perry nor Sullivan are working on lottery sales issues. But it only makes sense to give them jobs with appropriate cover, since UBS stands to make $30 million or more if it brokers the sale.Concern about this proposal is warranted, even necessary, and does not trivialize the fight against cancer or diminish Perry’s personal story. Lawmakers examining the lottery sale must make sure they do nothing to sap the state treasury and hurt public schools.