By GARRY RAYNO, InDepthNH.org

CONCORD — The proceeds from the newly approved video lottery terminals would go entirely to the state’s Education Trust Fund under a bill that had a public hearing Monday.

When lawmakers approved the new slot machines for charitable casinos in last year’s operating budget package, they dedicated 75 percent of the state’s take to go to the general fund and 25 percent to the Education Trust Fund.

A constitutional amendment requires all Lottery Commission revenues to be used for public education, and sponsors of House Bill 1407 said the proposed change would bring the revenue distribution more in line with the constitutional requirement.

The bill’s prime sponsor, Rep. Dick Ames, D-Jaffrey, told the House Ways and Means Committee the bill would provide an estimated $93.3 million more for the Education Trust Fund in fiscal year 2027.

Ames said the current law was enacted as a late amendment to the budget trailer bill last year enabling video lottery terminals in a small number of facilities that are highly regulated.

He said the division of the state’s share from the new gaming, sending 75 percent to the general fund and 25 percent to the Education Trust Fund is in direct conflict with the state’s constitution.

He read Part Two Article 6-b which states “All moneys received from a state-run lottery and all the interest received on such moneys shall, after deducting the necessary costs of administration, be appropriated and used exclusively for the school districts of the state. Such monies shall be used exclusively for the purpose of state aid to education and shall not be transferred or diverted to any other purpose.”

It has been a long tradition and practice that all lottery earnings go 100 percent to education, he said, and noted the video lottery machine terminals fit within the definition of lottery which is a game of chance.

The additional money would help to reduce the over reliance on local property taxes to fund public education and provide more state aid to help meet New Hampshire’s constitutional obligation to fund public schools, he said.

Committee Vice Chair, Rep. Jordan Ulery, R-Hudson, noted Ames made a blanket statement about the constitutional requirement for the lottery money and wondered if that assertion was based on the current notion of lottery or at the time it was put in place.

Ames said he embraces both as the definition involves a game of chance where you can win a lot or a little depending on the roll of the dice or the roll of a machine.

In New Hampshire the term is video lottery machine for a good reason, he said, noting the revenue requirement in the constitution was established not that long ago. The 90s were not that long ago, Ames said.

Ulery said the roll of the dice is far different from a machine dealing cards, or playing a horse race or a slot machine.

“I need to see that in my mind.” Ulery said. “I see them as two different things.”
Ames said it is a fair question that is worth a hard look.

But he said they are now using machines in ways they never have before.

“This way of gambling has been around a long time with more primitive machines, slot machines,” he said. “Now here in the present we are still talking about video lottery terminals.”

Committee member Bill Ohm, R-Nashua, asked Ames if there have been any court cases that tried to resolve the question of whatever lottery money has to go to education.

Ames said not that he could find.  On the education side, there has been no reason to complain, he said, because the Lottery Commission has been steadfast and all the money has been deposited for education.

This turn to provide 75 percent of the commission’s highest earner in the gaming world to the general fund is the significant change, Ames said.

Ulery asked if the change is made and next year more money goes to education, what effect would that have on the Statewide Education Property Tax.

Ames said they are two different variables and sources of revenues.

“You can send the statewide property tax in any direction at the discretion of the legislature,” Ames said.

If you mean the lottery revenue would offset the need for as much statewide property tax, he said, there is no reason to expect that government with its appetite would reduce the property tax.

The legislature has much greater discretion where the money goes with the statewide property tax than it does with lottery money which the constitution directs in a certain direction.

Committee member Rep. Thomas Schamberg, D-Wilmot, asked Ames if lottery money was a stable, reliable revenue source for education funding.

“I would hope that would be true,” Ames said. “One of the reasons New Hampshire went to a traditional lottery is to try to find a stable source of funding for education.”
No one else testified for or against the bill, which will have a work session in the committee at a later date.

The House’s electronic tracking system showed 14 people in support of the bill and one opposed.

In the last session, budget writers not only directed 75 percent of the video lottery revenue to the general fund, it lowered the amount of money going to the Education Trust Fund for other levies such as the business, tobacco and real estate transfer taxes while increasing the percentage going to the general fund.

For the past decade or so, the Education Trust Fund has had a surplus that reached more than $260 million several years ago, but has been declining sharply the past few years as education spending has outpaced revenues largely due to the Education Freedom Account program. In its fifth year, the program will cost more than $50 million and about $112 million over this biennium.

In approving the program, lawmakers did not add a new revenue source or increase any tax rates to pay for it, so it draws money from the Education Trust Fund which also funds state adequacy grants to school districts and charter schools, and also covers some transportation, special education and building costs.

Garry Rayno may be reached at garry.rayno@yahoo.com.