Dems and Labor Respond to Lottery Privatization Proposal

Most privatization schemes cooked up by Republicans are considered DOA in the Democratic controlled legislature. That is not the case with Arnold's plan to hand the state's lottery over to a private firm. The Democratic leadership is at least open to hearing more about it. LAT:

This time, some Democrats are leaving the door ajar.

"It's worth at least taking a look," said Assembly Speaker Fabian Nuñez (D-Los Angeles). "Generally, we don't like contracting out. We see it as a way to short-shrift state employees. This is a little bit different….The question for us is whether we are maximizing our ability to generate significant revenues from lottery. Everything we are looking at preliminarily says that, right now, we are not….

"I'm circumspect, but this deserves an opportunity to at least be fleshed out."

Senate Leader Don Perata (D-Oakland) took a similar view, saying he believes it is lawmakers' job to "turn everything upside down and shake it and see what comes out."

Others were not nearly as charitable.

Sen. Dean Florez (D-Shafter) made public a legal opinion drafted by legislative staff at his request earlier this year that declared any lottery privatization proposal would have to be approved by the voters, a point with which administration officials disagree.

"I am very concerned that the governor is floating a proposal on which he clearly has not done his homework," Florez said.

State Sen. Sheila Kuehl (D-Santa Monica) said the proposal would probably leave the state more reliant on gambling for revenue; provides no evidence that private firms could operate the lottery more efficiently; and was conceived by investment bankers who stand to make a bundle on such a deal. "I hope everyone is rational about this," she said.

Put me personally in Kuehl's camp. The private industry is drooling over the prospects and term limited legislators love to find a quick buck to get out of a jam. That makes me very wary.

SEIU 1000 also issued a statement of alarm. SacBee:

Jim Hard, president of the Service Employees International Union Local 1000, which represents 500 lottery sales representatives, information technology specialists and support staff, said the governor is listening to Wall Street advisers whose priority is making money, not protecting the interest of taxpayers.

"What's the risk besides the rip-off of the California taxpayer?" Hard said.

The labor leader suggested that the current system can be made more efficient with guidance from the top.

"Our members who staff the lottery's non-management positions are experts at their jobs, and given the right direction and the right incentives they could make lots of money for California's education system," Hard said.

Meanwhile, CTA is worried "that such a deal perpetuates the myth that lottery proceeds bankroll public schools when they actually represent less than 2 percent of total spending." SFChron:

"We're concerned that people will think the funding difficulties for education will be solved if this happens, which they won't be," said Barbara Kerr, president of the teachers union. "School financing could even become worse if an inflation factor isn't included."

The administration has promised that education funding would not dip below the $1.1 billion that schools now receive annually. That does not mean it will keep pace with inflation or increased enrollment. After all, we are talking about a potential 40-year lease.

This doesn't change the financing that currently goes to California schools, it strengthens it. It's a better situation for California schools," said Adam Mendelsohn, Schwarzenegger's communications director. "This is a win-win for California on every front."

I do not see how that is possible. You are guaranteeing schools will get the minimum they get now and nothing more than that.

But Kerr of the teachers union said that the number of school students would grow over the life of a long lease and buying power of dollars decrease with inflation.

Kerr also questioned what would happen to the 620 public employees at the lottery commission if it became a private operation.

"There's a lot to be concerned about and a lot that needs to be talked about before anything becomes concrete," Kerr said. "This might help the budget but as it's been represented so far it isn't going to help education or public employees."

We need to know more about this plan. It has been light on the details thus far, but what we have seen is not encouraging.