State Rep. John Diehl, R-Town and Country, advances an interesting proposition: eliminate the Missouri State Lottery. More than 40 states have lotteries; and 23, including Missouri, use the funds to finance K through 12 education.
His plan is to place a referendum on the 2016 ballot for the voters to decide.
Diehl makes some strong arguments against the lottery. He says only 25 cents of every dollar spent on tickets actually ends up being used for education. He also claims that as a revenue source, it is inefficient and unstable. He also objects to the lottery on moral grounds, arguing that the state should not be promoting gambling.
The problem is that the state depends on the cash generated by the lottery. In a state strapped for funds, $278 million is a lot of money.
Diehl’s point that the lottery is inefficient is valid. Despite record ticket sales last year, the amount going to education actually declined by more than 7 percent. Prize payouts have had to be increased to keep people’s interest so they will continue to buy tickets. In addition, the Lottery’s administrative costs are huge, with too much being spent for travel and advertising.
Many public finance experts criticize the lottery because it acts like a regressive tax on the poor. In other words, a poor family must pay a higher proportion of its income on lottery tickets than more affluent households. Ironically, in light of the lottery’s use to fund education, it is usually the least educated who are the most frequent players.
The question is how do we replace the funds lost if we end the lottery? The state could raise tax rates but that would be highly unlikely. The GOP-controlled legislature would never pass a rate increase. Missouri could find new revenue sources. Again, very unlikely because all the obvious, and even some of the more obscure, revenue sources have already been taken.
Perhaps the best way to make up the funds is to increase the state’s economic growth. But this is easier said than done. And it would also require that education receive the lion’s share of any revenue increase that resulted from higher economic productivity, which is far from guaranteed.
In the event that the lottery is scrapped, it is more likely that education would be cut or funds would be transferred from another state function such as environmental protection or social services.
Diehl’s suggestion actually raises another more far-reaching question, however: Is a less-than-satisfactory revenue source better than none at all? The answer to this question must be given in the context of education. If the lottery funds were earmarked for something else, you probably would get another answer. Simply put, the state needs to spend more per capita on education, not less. Getting rid of the lottery, as flawed as it is, will not improve the state’s economy and will hurt education.
Rather than just eliminating the lottery. We should be thinking of ways to improve the lottery’s efficiency or devising other more effective means to raise $278 million for the state’s education. The lottery’s not perfect but it’s the best thing we have to help fund education.
