As details continued to leak out Wednesday about Indiana Gov. Mitch Daniels' plan to privatize the Hoosier Lottery, reaction from area lawmakers was less than encouraging.
Daniels is expected to unveil the proposal — which would likely raise money for higher education — at 11 a.m. today.
Wells County Republican Rep. Jeff Espich was briefed on the idea a few weeks ago along with other key lawmakers.
His understanding of the plan was to entice a private entity to run the lottery in exchange for an upfront payment that could reach $1 billion as well as an ongoing annual stream of revenue.
Right now, the lottery funnels a little less than $200 million a year to the state budget. A slice of that goes to support teacher, police and firefighter pensions, with the bulk going to reduce auto excise taxes.
"The governor is a man of big ideas, and I don't think he's afraid to suggest them. I give him great credit for that," Espich said. "On the other hand, both the legislature and the public will only accept so many big ideas."
He said he is afraid that so many controversial programs — from implementing full-day kindergarten, getting approval to build a toll road around part of central Indiana and increasing the cigarette tax to finance a low-income health insurance program — might dilute Daniels' ability to get any of them done.
Espich said the lottery proposal differs from the long-term lease of the Indiana Toll Road because administration officials claimed the road was losing money and could be run more profitably in the private sector.
But the lottery has steadily increased profits in recent years.
"On the surface it's not as clear cut a good deal as Major Moves," he said. "We could get short-changed in 10 years."
And Espich isn't so keen on where the money would go — to support college scholarships.
"The state already ranks sixth in scholarship assistance, so I'm not sure that's a good reason to make such a bold move," he said.
A leaked copy of the governor's presentation surfaced Wednesday, providing more detail on the scholarships.
Other lawmakers questioned whether a private company could squeeze out more profit because the Hoosier Lottery is already run as a quasi-governmental agency — giving it more leeway than traditional state agencies.
Rep. Phil GiaQuinta, D-Fort Wayne, is concerned that Daniels is sacrificing the future to gain some cash today.
"The problem is he is trying to find ways to do things now that will help him in his tenure, but it leaves the next generation short on some revenue," he said. "Where are we then?"
Others questioned the possibility of corruption in a privately run lottery.
"Oh my," was Monroe Republican Rep. Mike Ripley's reaction to the idea. "There are a lot of things I think the private sector can do better, but I'm not sure about this one. Because of the potential for graft it might be better to keep it in government hands."
Rep. Marlin Stutzman, R-Howe, said he actually suggested the idea to the governor during the debate to privatize the Indiana Toll Road. But that doesn't mean he's on board, especially because he hasn't heard the details.
"If you did privatize it, and there was corruption, you can't change course as quickly as if it's run by government," he said. "At the same time, I know someone would be willing to give us a huge chunk of money."
If plan is approved
Here is how proceeds from any privatization of the Hoosier Lottery would be spent under the governor's Brain Gain Plan:
- 60 percent of the proceeds would create a permanent endowment. Its earnings would pay for new Hoosier Hope scholarships for outstanding high school graduates enrolling in full-time degree programs at any public or private higher education institution in Indiana.
- Students attending four-year programs would receive $5,000 annually for tuition, fees, books and other expenses. Those attending two-year institutions would receive $2,500.
- The awards would be forgivable loans that would not have to be repaid if the student remains in Indiana to work for three years after graduation.
- Scholarships would be based on merit, including scores on the SAT or ACT exams and cumulative grade-point average.
- 40 percent of the proceeds would create a World-Class Scholars Fund to attract renowned researchers and scholars to Indiana's public colleges and universities.
- Grants would be used to create endowments to support salary and startup costs but they would be available only to the state's public colleges and universities.
- Decisions about awarding grants would be made by a new board operating under the auspices of the Commission for Higher Education.
- All grants would require matching contributions from the institutions receiving them.