County backs ‘Lottery for Localities’ push

FRONT ROYAL – A growing number of local governments want a piece of the state lottery pie and hope to get lucky next year.

The Warren County Board of Supervisors voted 4-1 on Tuesday to show support for “Lottery for Localities” – an initiative that seeks the return of some proceeds back to local governments.

County Administrator Doug Stanley told the board a Virginia Association of Counties committee discussed the concept in August, and that it has attracted support primarily from municipalities trying to find alternative sources of revenue.

Should the proposal pass the General Assembly, some proceeds from lottery sales would be split between Warren County and Front Royal, Stanley said. Vice Chairman Archie Fox asked Stanley how much revenue the county could expect. Stanley said no data is available to show estimated revenue from lottery sales.

Representatives of Nottoway County and the towns of Blackstone, Burkeville and Crewe recently signed on to support legislation that, if approved by the General Assembly, would allocate 5 percent of total lottery sales back to the general revenue funds of localities where sales originated.

A document put together by supporters of the initiative points out that municipalities do not tax sales of tickets through the Virginia State Lottery – a $1.8 billion, state-run enterprise.

“The lottery has been referred to as a ‘backdoor tax’ or ‘regressive tax’ in which the poor give money to the state government,” the paper states. “Lottery spending drains rural communities of dollars that might otherwise be spent energizing our local economies by generating local retail sales as well as meals, gas and lodging taxes for our local general revenue.”

Supporters propose that the initiative would only affect the prize payout portion of the lottery funds. The Virginia Lottery would cull the money from sales and place it in a Lottery for Localities fund until payout. The lottery would pay localities on a quarterly basis.

Virginia lottery disbursements for calendar year 2015 resulted in an estimated $1.166 billion devoted to prizes; $103 million paid to retailers; $90.8 million spent on operating costs; and $533.8 million or 28.9 percent for public schools. A 5 percent kickback would result in $92.2 million returned to local governments, according to the supporting document.

Information collected by Nottoway officials shows that retailers in the area’s ZIP codes sold approximately $6.2 million in lottery tickets in 2015. The school system received a little more than $2 million from the sales, the document states. By contrast, Fairfax County received $36 million in lottery proceeds that year.

“Whereas, it is envisioned the allocation will be culled from total sales and subtracted from that portion of the lottery pool designated as the ‘prize pool,'” the resolution states. “Whereas, in this way the public school funding allocation is untouched and no monies are diverted from public education…

“Whereas, the Warren County Board of Supervisors is supportive of the request as a way to provide additional revenue for cash-strapped rural localities to meet the increasing demands for public services,” the resolution goes on to state.

Warren County Supervisor Tony Carter voted against the resolution, expressing doubt the initiative would pass. Carter cited the car-tax relief legislation from the late 1990s in which the General Assembly ended the levy but promised to reimburse local governments for the lost revenue. That didn’t come to fruition, Carter recalled.

Carter said he was afraid that the state would take the money out of one pocket and put it in another.

State Sen. Frank Ruff proposed a bill in the 2012 legislative session seeking to impose a sales tax on lottery tickets. The Virginia Lottery successfully lobbied against the bill later defeated during a Senate Finance Committee hearing. The state constitution allows the Virginia General Assembly to redirect a portion of the lottery proceeds for purposes other than education but to do so requires a 4/5-majority vote in both the senate and House of Delegates.

Nottoway County and its towns would have received almost $311,000 in 2015 if lottery tickets were taxed at 5 percent or the localities had a 5-percent kickback, the document states.

“While larger communities might view these amounts as ‘chump change,’ they do represent significant sums to rural communities,” the document states.

Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or abridges@nvdaily.com

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