When in doubt -- or debt -- privatize. That's the questionable wisdom Gov. Blagojevich is turning to in his Sisyphusian attempt to dig the state out of a financial mess that has drawn doomsday warnings from prominent members of the business community. Having steadfastly rejected raising income or sales taxes to generate revenues while putting his eggs in schemes such as keno, which proved a no-can-do idea, he is now determined to win lawmakers over to the idea of selling the Illinois Lottery by soliciting bids. It's a bad idea.
His plan is to sell the lottery for $10 billion or more, of which $4 billion would go to schools over the next four years and the remainder placed in a long-term annuity to generate upward of $650 million a year to replace the money education currently receives from the lottery. There is skepticism in some quarters that anyone will offer $10 billion, based on the unlikelihood that any buyer would be willing to wait 17 or 18 years to earn back the initial investment. But even if the bids that come in before the Feb. 20 deadline meet the governor's expectations, the plan would still ultimately sacrifice what is a long-term asset for a short-term gain.
That is to say, when the annuity ends, Illinois schools would stop drawing any benefits whatsoever from the sale of the lottery. Will it turn out to be a gold mine for the buyer? Yes, if it builds on revenues that hit almost $2 billion last year in turning out a profit of $670.5 million. No, if lottery revenues go down, a concern voiced by Blagojevich's former budget director John Filan, recently named the state's chief operating officer. The uncertainty fuels opposition to the bill.
Considering the paltry support a lottery sale got in Springfield last year, there's little reason to think it will -- or should -- gain favor now. Far better is the idea supported by this page, school reformers and Mayor Daley to more equitably distribute money for education by shifting support for schools away from property taxes and toward higher sales or income taxes.
The governor rejects that proposal. If his lottery scheme fails, is it possible he'll soften his opposition to expanding gaming as a way of generating money for schools? Is it possible the Chicago casino proposed by Judy Baar Topinka during her run for governor will become reality? He's got to do something to help schools. In introducing a bill this week to establish four new casino licenses -- for Chicago, the south suburbs, Waukegan and the O'Hare area -- Rep. Lou Lang (D-Skokie) said Blagojevich agreed to review the casino idea if it makes it through the Legislature. More casinos are not a panacea for schools, but one way or another, we must begin an all-out campaign to save them from fiscal neglect.
Trading a long-term asset for a short-term gain? It's something to ponder.