Plan may actually double the size of sales staff
TRENTON, N.J. — The New Jersey state treasurer today defended the Christie administration's plan to privatize parts of the New Jersey Lottery and said he does "not anticipate" it leading to layoffs.
Andrew Sidamon-Eristoff appeared in front of the state Assembly Budget Committee in Trenton to publicly discuss the plan — which has drawn staunch opposition from New Jersey's Democratic state lawmakers and U.S. congressmen — for the first time.
"We can re-energize the lottery brand," Sidamon-Eristoff testified. "We think it will be a positive for everyone who is part of the lottery family."
The treasurer said he expects the state to sign a contract "in the next few weeks" for private company Northstar New Jersey to take over the lottery's sales and marketing.
One fear, however, has been that nearly half of the lottery's staff will receive pink slips. Bill Quinn, a spokesman for state Treasury Department, said last week that 63 of the lottery's 136 public workers "could be affected."
Sidamon-Eristoff emphasized that the employees can apply with Northstar or be moved to other positions within the state government. He noted that Northstar is planning to nearly double the lottery's sales staff.
"I can't make guarantees," the treasurer said, "but we have a number of options for these people."
Still, the Communication Workers of America, the union that represents the lottery employees, continued to denounce the plan.
"I don't know why they'd go through the process of laying off employees with all this experience and making a vague insinuation that they could get new jobs," said Seth Hahn, the CWA's legislative and political director in New Jersey. "Why not put that in the contract? They can still do all they want to do with public employees."
State Sen. Barbara Buono — Gov. Chris Christie's likely Democratic opponent in November's gubernatorial election — also blasted the proposal at a press conference in Trenton today.
"With the economy sputtering and over 400,000 New Jerseyans out of work, now is not the time for the governor to play games with the lottery," Buono said.
Christie's campaign shot back.
"Buono and her special interest allies are running an increasingly desperate campaign based entirely on negative and misleading attacks," campaign spokesman Kevin Roberts said in a statement.
Northstar — the lone bidder for the contract — has promised to bring the state $1.42 billion more in lottery revenue of the next 15 years. If it meets its goals, the company will keep 5 percent of the increases.
State officials have stressed that New Jersey will continue to oversee the lottery's main operations, and that Christie has the authority to terminate the contract if the company fails to increase profits over two years.
The lottery is New Jersey's fourth-largest source of revenue, generating $2.6 billion in ticket sales a year. It netted the state $950 in revenue last year, financing scholarships and programs for the disabled and military veterans.
Assemblyman Vincent Prieto (D-Hudson), the budget committee chairman, wondered why the state simply couldn't increase profits on its own.
Sidamon-Eristoff said as good as the lottery has been for the state, its current "clunky system" does not have the "technical resources; the budgetary, management or procurement flexibility; global experience; or ability to provide appropriate incentives that are needed to compete effectively and grow sales over the long term."
"Northstar can build a better, more exciting brand," the treasurer said. "Quite frankly, it needs a bit of freshening up."
"We have a very realistic opportunity to make a whole lot more money," he added.
New Jersey's six Democratic congressmen have asked U.S. Attorney General Eric Holder to review the plan, fearing it breaks federal law.
But Sidamon-Eristoff said today the state attorney general and outside counsel vetted the plan to make sure it complied with "all legal requirements."
Lawmakers and union leaders have also questioned whether the bidding process was done in secret. Assemblywoman Bonnie Watson Coleman (D-Mercer) asked state comptroller Matthew Boxer today whether the Christie administration wrote the contract specifications in a way that could prevent other firms from bidding.
Boxer, whose offices reviews every state contract, said it wasn't the language that prevented more companies from bidding, rather a "limited pool of vendors" capable of doing such work.
"There was nothing unlawfully restrictive in the specifications," Boxer said.
Sidamon-Eristoff said New Jersey still benefited from a competitive bid process despite only receiving one bid for the contract.
"The joint venture that came forward included two of the four global firms," Sidamon-Eristoff said. "There would have been no way for Northstar to know, at the time it submitted its proposal, that it was the only bidder."
Sidamon-Eristoff's appearance today comes five months after he declined to testify at a hearing on the plan, saying it would be improper for him to do so while the bidding process was under way. Prieto was irked by the move, and the committee voted to seek subpoena power to get the treasurer to testify.
But a disagreement broke out today when Sidamon-Eristoff began the hearing by attempting to read a 10-page statement detailing the plan to clear up "misconceptions." Prieto asked him to simply answer questions to save time. Eventually, Prieto relented and the treasurer read his full remarks.
That led Assemblyman Declan O'Scanlon (R-Monmouth) to release a statement in the middle of the hearing criticizing Prieto.
"For months, Trenton Democrats have been screaming for the Treasurer to discuss details about the plan to re-energize the lottery," O'Scanlon said in a statement. "Now, when the Treasurer can publicly discuss every detail, they tried to shut him down. This dispels any contention that their motivation is anything but political and is a blatantly outrageous and disrespectful — to the treasurer and the public — maneuver."
Prieto, meanwhile, said he remained unconvinced of the plan after the treasurer's testimony.
"Much of the information provided to us today was punctuated with vagaries and uncertainties," he said in a statement. "My fear is that we're gambling on an operation that's not broken and, in the end, we will have lost control of one of our more successful assets, laid off state workers and failed to realize any real long-term benefits.
"I worry that the administration's zeal to turn the reigns over to a private company is motivated more by the guaranteed upfront payment, and the current budget holes it would help plug, than Northstar's ability to transform our lottery system and produce substantially more long-term revenue," Prieto continued.