Forget lottery, raise fuel tax

The half-century history of state-run lotteries shows that they tend to be adopted when one or more of three things are happening:

1.A state is running short of money.

2.Neighboring states are operating lotteries.

3.State taxes are high.

For Mississippi, it’s two out of three. Thus in a religiously conservative state, dominated by conservative politicians who have historically opposed a lottery, the odds are increasing that it will adopt what some have called a voluntary tax, and others a “tax on people who are bad at math” — that is, the poor and undereducated.

Last week, two related developments occurred on the lottery front.

Gov. Phil Bryant said he might add its consideration to the special session he has called on June 5 to deal with unfinished budget business, and House Speaker Philip Gunn named a nine-person committee whose charge, the speaker intimated, is to confirm his contention that a lottery is a bad deal.

Although that House study looks stacked from the outset, there is plenty of research already out there to confirm Gunn’s position.

Lotteries are terribly inefficient at raising government revenue, with states keeping about 30 cents of every $1 spent on lottery tickets.

Lotteries produce only a tiny fraction of what states need to operate, averaging about 1 percent of general revenue. And they prey disproportionately on those who can afford it the least.

According to a Brookings Institution report from a decade ago, when there were 39 states with a lottery (that number has since grown to 44), households in the lowest third of the income bracket saw their non-gambling expenditures reduced by an average of 2.5 percent after a lottery was adopted. That average includes all households in the demographic, both those which buy lottery tickets and those which don’t. “For households that do purchase lottery tickets, the decline in non-gambling expenditures must therefore be considerably greater,” the report says.

Usually, when a state adopts a lottery, its tactic for overcoming resistance is to earmark the proceeds for a cause that has significant public support, frequently education.

Mississippi’s lottery converts such as Bryant are trying to win over the opposition by floating the idea of earmarking the proceeds to highway and bridge repair. Bryant has asked the Mississippi Economic Council to weigh in on that idea.

Let’s hope the state’s respected chamber of commerce has the integrity not to give Bryant what he’s hoping for — political cover to pursue this inefficient, insufficient and inequitable funding scheme when there is a sensible, straightforward and indisputably fair way to come up with the money: Raise the dadgum gasoline tax.

If MEC needs any reminding, that’s exactly what it proposed in 2015 as one of the surest ways to raise the $375 million more a year it said the state needs to address its deteriorating roads and bridges.

It would take roughly 17 cents more in fuel taxes per gallon to come up with that amount of money.

Although that’s nearly double the 18.4 cents the state presently charges, the increase would still be almost 20 percent less than what the tax would have been had it kept pace with  inflation over the past 30 years.

By themselves, all of the alternatives being offered by Bryant or Republican legislative leaders come nowhere close to raising as much money as a straightforward increase in the fuel tax.

The best current revenue guess for a state lottery is between $85 million to $100 million a year. Another oft-mentioned source of money, the sales tax that Amazon and other online companies have voluntarily begun to collect, is pegged at between $30 million to $120 million.

The House also proposes issuing $50 million in bonds to help out cities and counties dealing with crumbling transportation infrastructure, continuing to divert some casino revenue to the cause, and, in what is the least fleshed out idea of all, letting cities and counties adopt a local fuel tax if their voters approve.

Cobble these convoluted, mostly untested approaches together, and maybe you come up with the $375 million, but maybe you don’t.

Even if you do, as states with lotteries earmarked for education have shown, there’s no guarantee that some of the revenue gains won’t be offset by budget reductions elsewhere.

Even the most optimistic study found that for every dollar received from lottery profits where education was designated as the beneficiary, 21 cents was cut from other sources of education funding.

If Mississippi adopts a lottery to pay for roads and bridges, it will be out of desperation — a self-inflicted desperation caused by stubbornly refusing to do the obvious.

 

 Contact  Tim Kalich at 581-7243 or tkalich@gwcommonwealth.com.