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Lottery revenue proposal passes in Senate

SANTA FE – The state Senate wants to lift a requirement that at least 30 percent of the revenue generated by the New Mexico Lottery go into a scholarship fund to help students pay college tuition and fees.

Senators voted 24-17 in favor of the bill, which now heads to the House, where a similar proposal died last year.

Since then, however, there’s been a change in leadership. Democrats reclaimed a narrow majority in the House ahead of this year’s session.

Sen. John Arthur Smith, a Deming Democrat who sponsored the bill, said the extra flexibility would allow the lottery to boost spending on advertising, increase payouts and get more people to play. That, in turn, should boost the amount of money going to scholarships, he said, even if the overall percentage isn’t 30 percent.

In other words, supporters said, it’s better to get, say, 25 percent of $200 million in revenue – $50 million – rather than 30 percent of $140 million, or $42 million.

“This is a mature lottery,” Smith said. “It’s no longer a growing lottery. We’re just trying to maximize our return to the scholarship fund by attracting additional players for scratchers.”

But opponents said lifting the requirement would hurt the scholarship fund.

Sen. William Soules, D-Las Cruces, said it would be “foolish” to count on boosting the revenue by diverting money away from the scholarship fund. Lottery customers tend to have lower incomes, he said, while people who go to college tend to come from higher-income families.

“It’s regressive,” Soules said of the lottery program. “It hurts our poorest people to benefit the affluent.”

The debate didn’t fall along party lines, though Democrats made up most of the “no” votes.

Under the current system, the lottery generates about $140 million a year in gross sales, though the number fluctuates. About half goes to pay out prizes, 30 percent goes to scholarships, and the remainder is for administration and marketing.

Smith said Texas and other states have higher payouts, which makes it harder to attract players near the state line.

The proposal also has a sunset clause in 2022, Smith said, so if the proposal didn’t work, the 30 percent requirement would go back into place.

Approval of Senate Bill 192 comes as the state tries to find a way to pump more money into the scholarship fund amid a budget crisis.

New Mexico has been able to cover about 90 percent of students’ tuition with help from the lottery revenue, but that figure is in line to fall to about 60 percent this year unless lawmakers find a new revenue source.

The debate on the 30 percent requirement now moves to the House, where Rep. Bill McCamley, D-Mesilla Park, is a co-sponsor of the proposal.