Texas Gov. Rick Perry's proposal to sell off the state lottery to fund cancer research and health insurance was met with skepticism Tuesday from a number of key Republican lawmakers who said the numbers don't add up.
"I don't know anyone who's supporting it," said Rep. Warren Chisum, R-Pampa, who chairs the powerful House Appropriations Committee. "I'd give it only a 10 percent chance of passing."
In an e-mail, Sen. Robert Duncan, R-Lubbock, who heads the Senate State Affairs Committee, said that while he likes the idea of creating a stable revenue source for the state, he isn't sure Perry's math "works out here."
Lt. Gov. David Dewhurst said he is concerned Perry's predictions would fall short, leaving education in the hole.
Perry centered his State of the State address around the idea of selling the state lottery for at least $14 billion. The proceeds from the sale would be divided into three trusts.
The first two would put aside $8.3 billion for public education and $3 billion for cancer research.
The remaining $2.7 billion would be used with federal money in a new health-insurance program that could cover as many as 600,000 currently uninsured Texas adults, according to Perry staffers.
The lump sum from the lottery sale would be invested, not spent, generating a yearly return of some $1.3 billion — about $300 million more than Texas currently gets from owning the state lottery, according to estimates from Perry's office.
Divvied up, $750 million would go toward education each year, $270 million toward cancer research and $243 million for the health insurance program. The governor's plan assumes that the state will find a buyer willing to fork over $14 billion and that the state's investments will yield a 9 percent annual return.
"If that's true, I'd like to know what they plan to invest in," said Rep. Mike Villarreal, D-San Antonio. "Every investment has a pattern of going up and down. What happens during those years when we're not earning that rate of return?"
Perry's advisers acknowledge that his plan would generate $250 million less per year for public education — money that would have to be supplemented from the general fund.
But Perry spokesman Robert Black said the revenue generated by the lottery sale "would be a lot more stable" than the money the state now gets from lottery ticket sales.
Lottery revenues have risen in recent years, after a decline of several years.
Assuming lawmakers are committed to funding cancer research and greater access to health insurance, Perry's plan would save money by allowing the state to raise money without borrowing, Black said.
Sold as a way to fund public education, the Texas Lottery was approved by voters in 1991 as part of a constitutional amendment. Last year, the state agency took in more than $3.7 billion in lottery ticket sales and allocated just over $1 billion to public education.
It wasn't clear whether voters would have to approve Perry's plan — should it make it out of the Legislature.
"The law's a little bit gray on that," Black said.
Chisum said the entire Republican House Caucus was stunned last week by Perry's executive order requiring an HPV vaccine for school-age girls.
The lottery idea "blindsided us again" he said.