Leasing the Lotto?

Paying down the state's debt without raising taxes was Gov. Arnold Schwarzenegger's mantra as he unveiled his revised May budget on Monday, but privatization was the underlying theme. Schwarzenegger suggested selling the state-created EdFund, which guarantees student loans, and proposed eventually leasing out the state lottery to generate more income. "We have to recognize that there is a lot more money in the private sector than in the public sector," the governor said, stressing that public-private partnerships are the wave of the future.

He didn't suggest immediate changes to the lottery. "This will take a lot of time to negotiate," Schwarzenegger added, noting that many other states' lotteries are run more efficiently and generate a lot more income than California's state-operated version. "I think we can do much better and could therefore afford many more things and pay off our long-term debt." The Governor assured that lottery funds for students would still be protected and acknowledged that since California's voters approved the lottery in its present form, there could be legal hurdles to having it run by a private company. "I'm not a legal expert, but if they decide the people need to vote on it, then we will need to put it on the ballot."

Other budget items include saving $40 million by eliminating the Williamson Act, which protects agricultural lands, and rescinding automatic cost of living increases for seniors and disabled people. The governor's revised budget is "mean-spirited," charges Assembly Speaker Fabin Nûñez, D-Los Angeles. "At a time of record prosperity, it punishes low- and middle-income families that are working hard and playing by the rules." Richard Stapler of Nûñez's office adds that legislators will need details about selling the EdFund and leasing out the lottery. "We have lots of questions," Stapler says. "Specifically on the EdFund, the overriding concern is how this will turn out for students. We have a great many questions about both proposals, and we will be fully vetting them in legislative hearings."

Stapler adds, "It will be interesting to see exactly what the governor is planning."

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