ALBANY – Gov. Spitzer is expected to propose in his State of the State Address today the unprecedented sale of future lottery revenues for as much as $40 billion, sources said yesterday.
The sources said the governor and his aides have already discussed several scenarios with Wall Street investment bankers for selling future lottery revenues. The plan would generate cash to fund state education programs that might otherwise face cutbacks because of a looming $4 billion-plus state budget deficit.
John McArdle, spokesman for Senate Majority Leader Joseph Bruno (R-Rensselaer) quickly poured cold water on the idea, contending – in a parody of a state Lottery slogan – “It sure sounds as if the governor is betting the state’s future on a ‘dollar and a dream.’ ”
One scenario being discussed by Spitzer aides would involve the outright leasing of the state lottery system to a private corporation for as long as 40 years in exchange for a massive infusion of cash for the state that could reach $40 billion or more, it was learned.
Those monies would then be placed in a special fund to generate revenues for the state’s K-12 schools and the state and city university systems.
Another plan would have the state retain control of the lottery system as well as its current $2.1 billion annual profit, but with future profits over several decades “sold” to investors for $4 billion a year or more.
Spitzer was said to be still weighing his options last night, although one source predicted he would urge the Legislature to at least consider some form of lottery sale.
The possible sale was also blasted by the Manhattan Institute’s E.J. McMahon, who said it could turn out to be “the mother of all one-shot revenues.
“No matter how you slice it, if you borrow money from a future revenue stream in the lottery to pay current expenses, you’re creating problems for New Yorkers in the future,” McMahon said.
One-shot revenues, involving the one-time sale of state assets, are often criticized by fiscal watchdogs as a questionable budgeting practice because they run up future, long-term debt in exchange for a rapid infusion of cash.
Assembly Speaker Sheldon Silver (D-Manhattan), Spitzer’s most important legislative ally, was noncommittal on the plan, pledging only to “review” whatever the governor proposes.
State Comptroller Tom DiNapoli had no immediate comment while Spitzer’s aides declined to comment publicly.