Tomorrow will have lottery news beyond the $700 million Powerball

It’s time for more Powerball fever in Wisconsin, as the jackpot has now hit an estimated $700 million, which likely means more people running to stores to plunk down$2-$3 a ticket today. Just bought for a group of friends myself, and there were a few others in line ahead of me when I did it.

Interestingly, Wisconsin’s Joint Finance is going to talk about the Lottery tomorrow, and not because they want to change budget estimates in case someone wins the big one. They’re actually going to discuss what to budget for the property tax credit that comes with the proceeds of the Lottery, and the situation surrounding the Lottery Credit offers more intrigue beyond legislators signing off on a number.

First of all, you may be curious to see what happens with lottery ticket sales when jackpots get this high. The Legislative Fiscal Bureau’s summary from May gives us a clue, as they say that lottery sales went up significantly in the weeks leading up to the $1.6 billion jackpot in January 2016.

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.

Now combine the lower lottery sales with the fact that the Joint Finance Committee agreed last October to blow all of the surplus money on property tax cuts last year (a move I found to be stupid at the time, and now you see why), and there was less money in the Lottery Fund to start the year. This means that the Lottery Credit is projected to go down by a sizable amount this year, raising tax bills for Wisconsinites this winter.

Lottery tax credit FY 2017 vs FY 2018
2016-17 $185.3 million
2017-18 Walker budget projection $167.2 million
2017-18 LFB re-estimate $156.75 million

That’s a drop of more than 15% in what’ll you get taken off of your property taxes this year, and my rough math indicates that this would raise the tax bill on the average home by about $20, and about $7 more than what Walker’s original budget would have done.

This doesn’t seem like a big deal on the surface, but you may recall that around the time the re-estimate of the Lottery Credit came out, the budget talks broke down, and I do think this had an effect. Given that GOPs and especially Walker have made “lower property taxes” a talking point of theirs, the increased chances of voters seeing higher property taxes in the year before the 2018 election may have spooked them.

Add in this week’s release from the LFB that showed rising property values will likely lead to Wisconsin property taxes being higher than previously projected, and the problem becomes bigger. In that memo, the LFB said that if Gov Walker’s budget stays as-is, that property taxes would go down $6 on the average home next year.

But now if you add in the $7 for the lower lottery credit, and now it’s UP $1, and bye-bye “lower property taxes” talking point. Not that the “lower property taxes” shtick will work on most people with IQs over 80 at this point (not after seeing services suffer and other local taxes and fees go up), but it’ll be hilarious to see Walker and WisGOP flounder about trying to explain away an increase that still would be below the rate of inflation.

Back to the big-money drawings of today. The giant jackpot and a $393 million one that was won in MegaMillions 2 weeks ago both got big after June 30, and therefore took place in the 2017-18 Fiscal Year. Which means you won’t see your property tax bill be any lower from those extra sales until December 2018. So no help for Scotty and WisGOP there, either.



But it does lead me to wonder if the GOP-led Joint Finance Committee will try some shenanigans tomorrow. Might they gamble on higher sales from the recent huge lottery jackpot, and raise the Lottery Credit for this year? It would be an extremely risky maneuver, and might not be allowed (by law, the minimum reserve must be 2% of lotto sales), but I’m going to be interested to see if the WisGOPs try to justify the recent big jackpots and related larger sales as a reason to try.

Another option the WisGOPs on JFC could try to keep the Lottery Credit high would be by using General Fund tax dollars to send payments to retailers that sell lottery tickets. This was floated in the Senate GOP’s budget proposal from last month (see pages 514-516 of this PDF), where $45 million in tax dollars would be sent to retailers, allowing the Lottery Fund to send more money back to taxpayers.

But considering the prospect of no Trump Boom and lower revenues for the next couple of years along with a $1 billion structural deficit starting in 2019, there may not be $45 million left to give away in this budget. Combine that with the extra budget holes that the Fox-con would give, and the JFC might back off from messing with the Lottery Credit. But keep your eyes peeled for something funny tomorrow, as there may be more news with the Wisconsin Lottery beyond finding out that I someone won the $700 million Powerball.