Taxpayer dollars slated to prop up NM’s lottery scholarship program

By Rob Nikolewski │ New Mexico Watchdog

SANTA FE, N.M. — When the New Mexico Legislative Lottery Scholarships were created in 1995, it was done with the understanding no tax dollars would be used to fund the program.

All of the money needed to pay for the tuition handed out to tens of thousands of students in New Mexico since its inception have come from proceeds collected from people buying tickets for such games as Scratchers and Powerball jackpots.

But lottery revenue is down and budget recommendations from both the Legislative Finance Committee and the office of Republican Gov. Susana Martinez are each calling for money from the taxpayer-supported general fund to keep the lottery scholarship program afloat until changes are made to make the program financially sustainable.

The LFC is calling for $11 million this spring and another $11 million in fiscal year 2015, contingent on the Legislature coming up with a long-term fix.

The governor’s office is calling for an appropriation of $16 million.

“We do not want children who are in college to feel the pain because this fund is not solvent,” Martinez said Monday at a news conference where she announced her budget recommendations. “We also think (the lottery scholarship) can work within the parameters laid out by the Legislature when they created this fund.”

When the upcoming 30-day legislative session starts in two weeks, lawmakers will try to hammer out an agreement that will get the lottery scholarship program back on solid financial footing.

A number of solutions have been proposed, ranging from reducing the amount of the awards given out to students to increasing the grade point averages for students (right now, a minimum GPA of 2.5 is required).

State Senate Majority Leader Michael Sanchez, D-Belen, has mentioned partially funding the program with tribal gaming revenue and earmarked tax hikes, but on Monday the governor said her $16 million recommendation is designed to happen just once.

The lottery scholarship program “was intended to live within the money it generates,” Martinez said. ”There should not be general funds or a carve-out of general funds placed into the lottery.”

But what about the guarantee made in the mid-1990s that no taxpayer dollars would be used at all?

“These laws are not etched in stone,” said Rep. Luciano ”Lucky” Varela, D-Santa Fe. “We can change them … We need to stabilize the lottery.”

“This problem has been known, it’s been looming, it’s been coming and should have been solved a year or two ago, but it was not solved,” Martinez said.

At a committee hearing last month, legislators from both parties admitted the idea of using tax dollars for lottery scholarships wouldn’t sit well with many voters, but coming up with a long-term solution could make the issue more palatable.

“We have commitments to our high school juniors and seniors,”said Rep. Jimmie Hall, R-Albuquerque. “To go into the general fund, I don’t want to do it unless we have a solution on board.”

“We keep kicking the can down the road,” said Sen. Mary Kay Papen, D-Las Cruces. “We have people who don’t want to make hard choices.”

The financial problems with the lottery scholarships have been largely blamed on two factors: stagnant numbers of tickets being bought and the rising costs of in-state tuition.

Under the current system, lottery scholarships pay for 100 percent of tuition for eight consecutive semesters, beginning with the second semester of enrollment. The scholarships can be used at 25 public colleges, junior colleges or universities in New Mexico and students who transfer to another eligible college can keep the scholarship, even if tuition increases.

In April 1995, then-Gov. Gary Johnson signed legislation creating the New Mexico Lottery and the college scholarships that have since gone out to more than 90,000 students.

From his perch as a former governor now living in Taos, Johnson said the lottery scholarship program doesn’t create enough incentive for colleges and universities across the state from curbing growing tuition costs.

“It’s given higher education in New Mexico immunity from competitive pricing,” Johnson told New Mexico Watchdog. “Tuition costs have risen because, hey, everyone’s on the lottery scholarship.”

Contact Rob Nikolewski at rnikolewski@watchdog.org and follow him on Twitter @robnikolewski

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