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Lottery scholarship ‘fix’ tightens rules, taps liquor taxes

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Senate Majority Leader Michael Sanchez, D-Belen, makes sure a lottery scholarship bill passes the Legislature on Thursday. (Eddie Moore/Albuquerque Journal)

Senate Majority Leader Michael Sanchez, D-Belen, makes sure a lottery scholarship bill passes the Legislature on Thursday. (Eddie Moore/Albuquerque Journal)

SANTA FE – A bill to balance the state’s teetering lottery scholarship fund by cutting the popular college scholarships from eight semesters to seven, requiring students to take more credit hours and adding revenues from state liquor taxes squeaked through the Legislature with only minutes left Thursday.

Without the so-called lottery scholarship fix, a one-time $11.5 million appropriation in the state budget would have been eliminated. With the fix, starting in fiscal 2016, about $19 million annually from liquor excise taxes will replace the one-time General Fund appropriation.

“It’s very gratifying to see the Legislature has taken action on lottery (scholarships),” said Higher Education Department Secretary Jose Garcia. “… It gets us very close to solvency in the near future.”

Before the Legislature acted, the scholarship fund was expected to pay out about $67 million in scholarships over the coming year, while taking in only $40 million from lottery ticket sales.

Rep. Jason Harper, R-Rio Rancho, argues for an amendment to the lottery scholarship bill Thursday morning. (Eddie Moore/Albuquerque Journal)

Rep. Jason Harper, R-Rio Rancho, argues for an amendment to the lottery scholarship bill Thursday morning. (Eddie Moore/Albuquerque Journal)

With little more than an hour left in the legislative session before its constitutional adjournment at noon, Rep. Jason Harper, R-Rio Rancho, pushed for amendments to the version of the fix bill passed by the Senate. Democrats said the eleventh-hour amendments put the bill in peril, but they were ultimately adopted by the House 41-25.

The House changes included a provision for the liquor excise tax funding to expire after two years. Another change, addressing times when the scholarship fund balance runs low, would reduce scholarships to all students equally, rather than the original proposal to cut junior and senior students while preserving freshmen and sophomore scholarships.

The bill, pushed hard through the Legislature by Senate Majority Leader Michael Sanchez, D-Belen, the original sponsor of the lottery scholarship fund in 1996, passed the House 66-1.

The Senate began debate on the House amendments with seven minutes left in the 30-day legislative session. The Senate, on a voice vote, concurred with the House amendments with two minutes left, sending the scholarship fix to Gov. Susana Martinez.

Martinez said she plans to sign it into law.

“Yes, we’re going to do it,” the governor said. “That’s a short fix, but in the long run I think … it’s going to be able to be self-sustaining,” Martinez said.

“… It’s a solution that protects the core of the scholarship and is fair to all students. That’s why it was supported by students and members of both political parties,” Martinez said.

In addition to limiting the college scholarships to seven semesters rather than eight as currently allowed, the legislation will increase minimum enrollment requirements for students attending four-year colleges.

Those students would be required to enroll in 15 credit hours rather than 12. Requirements to maintain a 2.5 GPA to qualify for the scholarship remain unchanged.

Student leaders, who spent much of the session in Santa Fe tracking the lottery scholarship issue, said the fix isn’t perfect but offers relief to current recipients.

“We’re glad there’s some certainty,” said Jeremy Witte, director of governmental affairs for New Mexico State University’s student government group. “We can go back to students and tell them they’ll still have a scholarship.”

Sanchez said he was disappointed with some aspects of the House amendments but didn’t want to stop the bill and potentially leave some student scholarships unfunded this fall.

“I’m disappointed that they changed it, and I honestly think it’s going to hurt some people, especially some lower-income people,” Sanchez said. “But I’m not going to hurt the kids of New Mexico by trying to stop an amendment.”

The proposal passed by the Legislature in the final minutes was one of several plans to fix the struggling lottery scholarship fund.

Another proposal debated late Wednesday would have helped balance the scholarship fund by demanding that students who drop out or transfer from New Mexico colleges be required to repay their scholarships like loans. That proposal was killed by the House in a 27-32 vote after members called the proposal too tough on students.

Journal Capitol Bureau reporter Dan Boyd contributed to this report.

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