May 20, 2008 8:03 pm US/Pacific
Schwarzenegger Defends Lottery Budget Plan
SACRAMENTO (CBS 5/KCBS/AP) ―
After stinging criticism from California's non-partisan legislative analyst, Governor Schwarzenegger Tuesday defended his plan to sell bonds using future state lottery profits as collateral.
Legislative Analyst Elizabeth Hill said Schwarzenegger's plan to reduce California's $17 billion budget relied on overly optimistic projections of lottery revenue.
Last week, Schwarzenegger proposed a $144.3 billion state budget that was balanced through a combination of spending cuts and a plan to pump up lottery sales and then borrow against that future revenue, which he said would bring in $15 billion over three years.
"I will embrace it if they come up with something better," said Schwarzenegger, speaking at an environmental business event Tuesday.
Schwarzenegger's plan assumes a doubling of lottery sales and profits within five to 10 years through an expansion of lottery games and aggressive marketing. He wants to bring California's per capita lottery sales to the national average, doubling it from today's roughly $91 per person.
Our major concern with the governor's plan," Hill said in her review, "is that it makes overly optimistic and potentially unobtainable assumptions about the ability of the lottery to increase profits."
That would complicate school funding because bond holders would be able to take $1.2 billion in lottery proceeds now guaranteed for public schools, Hill said. Any gap in school funding would have to come out of the state's general fund.
(© 2008 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
