Senate may OK lottery deal today; Bill's revisions make lease more palatable; sponsor might drop cigarette tax plan
BYLINE: THEODORE KIM AND KAREN ESCHBACHER THEODORE.KIM@INDYSTAR.COM
Changes to a bill that would let Gov. Mitch Daniels lease the Hoosier Lottery may have given it the boost it needs to pass the Senate.
The Senate approved amendments Monday to Senate Bill 577 that would limit how much a private operator could make and that give the state oversight of lottery advertising.
"Perhaps it gives some comfort to people who are afraid it might get out of control," said Sen. Luke Kenley, R-Noblesville, who helped draft the bill. "We'll just have to wait and see."
The revised bill is expected to reach a Senate vote today.
Under the plan, a private company would pay the state at least $1 billion upfront and $200 million a year for 30 years to run the lottery. The upfront payment would be used for life-sciences research, to fund scholarships and -- if enough is raised -- to help communities pay for police and fire pensions.
The bill's success has been questionable even in the Republican-controlled Senate, in part because some lawmakers are worried that a private company will be determined to persuade players to spend more to maximize profit.
An amendment offered by Sen. Gary Dillon, R-Columbia City, caps the amount that annual gross revenue can grow under a private operator at about 8 percent.
Kenley, chairman of the Senate Tax and Fiscal Policy Committee, said the limitation is not a deal-killer but means the state may not get much more than the minimum $1 billion upfront payment.
An amendment by Sen. Jeff Drozda, R-Westfield, would prohibit money raised from the lottery deal to be used for stem-cell research.
Even if it passes the Senate, the bill will face tough opposition in the Democratic-controlled House, which included a provision in its budget that would prohibit the lottery from being privatized.
Cigarette tax bill
Also hanging in the balance today is House Bill 1008, which would increase Indiana's 55.5-cents-per-pack cigarette tax by 25 cents in order to fund health insurance for some of the estimated 850,000 Hoosiers who lack coverage.
Rep. Charlie Brown, D-Gary, said Monday he was still looking for the Republican votes he'll need to pass the bill. He also said Daniels, who has called for a minimum cigarette tax increase of 25 cents, needs to get involved.
"The governor was out of town today," Brown said Monday, while Daniels was in Washington for the National Governors Association meeting. "Even though his people have worked the Republican side of the aisle, there's obviously a need for his influence on them. It's up to 'Lord Shorty' to get back and get the votes."
Daniels has made increasing the cigarette tax one of his major objectives of this session and has earmarked the revenue for anti-smoking programs, immunizations for children and health insurance for the working poor. A bill containing Daniels' plan has already passed the Republican-controlled Senate but had no funding mechanism.
That crucial factor was left to the House, which Democrats control 51-49. Brown said that unless Daniels can persuade more Republicans to support the bill, he might not seek a vote on it at all, letting it die.
"All I'm hearing (from Republicans) is, 'We have maybe 16 votes.' That's not sufficient," Brown said. "I've said from the beginning as many as 25 Republican votes are needed. After all, this is the governor's program for a cigarette tax increase. But they're looking for Democrats to provide most of the votes. I think that's unfair."
Gas tax cap
In other business Monday, the House voted to cap sales taxes on gasoline and diesel fuel, sending the proposal to the Senate.
House Bill 1622, sponsored by Rep. Dennie Oxley, D-English, was approved in a 75-25 vote. The approval came over the objections of some GOP lawmakers who said the cap would be difficult to enforce and play havoc with the state's finances.
Under Oxley's proposal, the state would suspend its 6 percent sales tax on any gasoline purchased above the pump price of $2.25 a gallon. Motorists would still be charged sales taxes up to that threshold.
In other words, if gas cost $3.25 a gallon, a motorist who purchased 10 gallons would save 60 cents on taxes. Sales taxes on diesel fuel would be frozen when pump prices pass $2.40.
The bill would not affect the state's 18-cent gasoline or 16-cent diesel taxes, which are separate.
The Legislative Services Agency estimates the bill could cost the state $37 million to $45 million in tax revenue a year. That revenue now goes to the state's general fund and for local property tax relief.
Toll Road money
Also on the transportation front, the House approved legislation that would redirect $60 million in interest income created by last year's Indiana Toll Road deal to local road projects.
Lawmakers voted 51-48, mostly along party lines, to send House Bill 1830 to the Senate for further debate. Rep. Jon Elrod, R-Indianapolis, was the only Republican to vote for the bill.
Republican lawmakers portrayed the bill as a brazen raid on the funds generated by the Toll Road lease. The bill's sponsor, Rep. Terri J. Austin, D-Anderson, said the money would still go toward roads. But instead of the bigger state projects outlined in Major Moves, the $60 million would go to smaller local road and street efforts.
Star reporter Mary Beth Schneider contributed to this story.
Call Star reporter Theodore Kim at (317) 444-2770.
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