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Cahill Blames $90M Lottery Shortfall on Faulty EstimatesBy Jim O'Sullivan - October 26, 2007
State House News Service
BOSTON - Lottery revenues trail projections despite sales growth of $90 million through the first quarter of this fiscal year, Treasurer Timothy Cahill told other state leaders Thursday.
Lucrative sales from a July Mega Millions jackpot and "healthy" returns from a new $20 ticket have put the Lottery, which provides vital funding for municipalities, on track to beat last year's sluggish revenues, Cahill said in a letter. The state's legalized gambling system appears unlikely to meet growth projections of nearly 15 percent, though, which would create a shortfall that would send budget writers scrambling to find cash to send cities and towns.
In his letter Thursday, Cahill said budget writers, for "some inexplicable reason," had estimated overall Lottery revenues would increase 6.6 percent when putting together the fiscal 2007 budget. In fact, the Lottery slumped 1.5 percent in the fiscal year that ended last June, after a record-breaking fiscal 2006.
"Unfortunately, the incorrect and somewhat fanciful projection from the FY07 budget continues to be used as a baseline for allocating current and future aid to cities and towns," Cahill wrote Thursday.
Through the first quarter of this fiscal year, sales have increased $59 million over fiscal 2006, and $90 million over last year, according to the letter. But projections anticipated 14.8 percent growth, meaning sales would have to increase $660 million over last year.
"It is far too early to predict where our numbers will be in June 2008; however, we are encouraged thus far by the early trends and expect to return in excess of $900 million net revenue to the commonwealth," Cahill said.
State budget writers assumed Lottery returns to cities and towns of $935 million when assembling the budget for this fiscal year.
House Speaker Salvatore DiMasi last month demanded Cahill provide an explanation for shortfalls that the treasurer later chalked up to inaccurate calculations by the speaker.
In a Sept. 28 speech to business leaders, DiMasi said he was worried the state would have to account for $120 million it sent to municipalities last year but that the Lottery never produced.
DiMasi spokesman David Guarino said the speaker was trying to encourage a public airing of Lottery revenues.
"This is the discussion we should be having," Guarino said. "[DiMasi] remains concerned about the existing shortfall and the possibility of a greater shortfall next year. We're going to work with the treasurer, the governor, and the Senate president and try to determine whether this is an aberration or part of a trend that we should be concerned with."
Mature System
In the letter provided to the News Service by his office, Cahill pointed to a "mature" Lottery system earlier this year when making the case that the state should welcome casinos as a new source of revenue. The games, he said, had been overtaken by competition from other states and gambling opportunities.
Cahill spokeswoman Alison Mitchell said the letter was intended to remind other leaders that "the Lottery, while it is the best-run lottery in the country, is mature, and can only grow so much."
Late Thursday, a Patrick spokesman said aides had not seen the letter, and declined to comment. |
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