Monday, June 12, 2017

Jackpot in Cali means Wis budget still messed up

Late Saturday night, Governor Walker and legislative Republicans in Wisconsin got some bad news on their 2017-19 plans, and it came from an unusual source.
Jackpot! A lucky lotto player in California had all the winning numbers after Saturday's Powerball drawing, lottery officials said.

The grand prize reached an estimated $447.8 million.

The winning ticket was sold at a store in Menifee, southeast of Los Angeles.

Why does this matter to the Wisconsin state budget? Because most of the proceeds from the state’s lottery are kicked back to taxpayers in the form of property tax relief. The winning jackpot means the Powerball resets to $40 million, meaning there is no chance of another massive Powerball jackpot spurring ticket sales between now and the end of June. This means that the projections that the Legislative Fiscal Bureau gave last month on lottery sales will likely hold for the rest of the 2017 Fiscal Year, and therefore this winter’s property tax write-off will also likely be as the LFB predicted.

The LFB notes that Powerball and other Lotto games have the biggest variation in sales based on how big the jackpots are, and the lack of massive jackpots has caused those sales to fall significantly from 2015-16, when Powerball hit record levels.
On-line game sales appear to be lower in 2016-17 than estimated in October, 2016, primarily because large Powerball jackpots, which can increase sales dramatically, have not been generated in 2016-17 as often as they were in 2015-16. The Powerball game accounted for slightly more than 48.5% of all on-line (lotto) game revenue in 2015-16. In 2015-16, there was an occasion when the Powerball jackpot grew high enough to attract weekly sales of more than $20.0 million for at least a two-week period. In 2016-17, there have been no weeks in which Powerball sales have exceeded $5.0 million. Average weekly sales for Powerball tickets in 2015-16 exceeded $2.15 million per week. By contrast, in 2016-17, average sales through April, 2017, have been about $1.52 million per week. Total Powerball sales this year are not likely to reach the estimate of sales made in October, 2016. The reestimate of on-line ticket sales in 2016-17 would decrease from $232 million to approximately $213.5 million….

10. Under the October, 2016, estimate, the opening balance of the lottery fund on July 1, 2017, would be $12,350,300. The 2016-17 payout certified in October, 2016 was $185,311,200 and the actual amount paid out in March was $183,433,000 which produces a balance of $1,878,600 to add to the opening balance. In addition, reestimating 2016-17 [total] lottery sales [down] to $597.3 million has the net effect of decreasing the 2017-18 opening balance to $6,378,000. The net effect of these changes, also, decreases the amount available for the lottery and gaming credit in the 2017-19 biennium.
And that’s why Walker and other WisGOPs are disappointed by someone winning the Powerball- there’s less money they can use for property tax relief.

Walker’s budget projected that there would be $167.7 million in 2017-18 and $169.35 million in 2018-19 in lottery proceeds that could be kicked back to property taxpayers. But when the Legislative Fiscal Bureau looked at the actual numbers, they ended up not being so rosy for homeowners.

Lottery Credit 2017-19, LFB re-estimates vs budget
2017-18 $156.75 million (-$10.95 million vs Walker budget)
2018-19 $165.1 million (-$4.25 million vs Walker budget)

The Lottery Credit falling short means that property taxes will be higher than what was projected by the LFB a few weeks ago. Rough math indicates that this difference is only $7 this year and $2.50 the next year, but that small difference means that property tax bills would be projected to be higher in Winter 2018 than Winter 2014, even with stupid budget gimmicks like a $27 property tax cut to get rid of the state Forestry tax, and an increase in the School Levy Credit (total price tag for these gimmicks - $267 million).

If you watch last week’s edition of Wisconsin Eye’s Rewind, JR Ross of WisPolitics mentions how obsessed Walker is with having a talking point of “lower property taxes on an average Wisconsin home.” Which is why I don’t think it is coincidence that state budget talks derailed right around the time that the Legislative Fiscal Bureau came out with their budget paper showing that the Lottery Credit was going to be lower than expected, and raise property taxes beyond 2014’s levels.

Now Walker (and apparently Senate leader Scott Fitzgerald) are stuck, because they want to claim these property tax decreases ahead of the 2018 elections, but there is no money available to make up the difference while also taking care of numerous other needs that are supposed to be paid for in this house-of-cards budget. That $267 million sure would come in handy to fill those holes, wouldn’t it?

As I’ve said before, what is the point of borrowing ourselves into oblivion on roads, making small school districts have to fold up and consolidate, or making the state’s largest city have to cut the amount of cops on the street just to say “we cut your property taxes by $40”? But this is what you get when you have today’s WisGOPs in power, because they believe in political campaigning instead of governance.

When you have a party so consumed with gimmickry and AM radio talking points that they have to actively root against someone hitting the Powerball in order to make their budget work out, you have a party that isn’t fit to lead. Now the rest of the state budget is likely to be “fixed” some time in the next few weeks by trying to sneak through a last-minute pile of crap that will solve none of the problems, won’t make anyone happy other than GOP campaign contributors, and will stagnate the state’s economy even more in these next couple of years.



  1. I know it sounds fussy, but it continues to bother me that our government is relying on gambling revenue to cover portions of operating costs.

    In the context of the lottery, the state is "the house", so it's not a matter of risk; it's a matter of ethics. Based on my reading, gaming revenues of any kind rely strongly on the compulsive player - that's true of lotteries, casinos, horse tracks - all of it.

    I grew up near Arlington Park and still love the races, so don't think of me as puritanical on this point. It's just an ethical point I find modestly uncomfortable.

    Such dubious and unsteady revenue should, in my opinion, be looked upon as windfall, but I have no rational way of making that distinction in the real world nuts and bolts of a government budget.

    I'm kinda pissing in the wind here. Shouting into the void.

    1. I don't disagree that much. At least have the money go for schools or roads instead of a write-off of property taxes (which doesn't do much for a lot of people)