STUMP » Articles » Illinois Budget Impasse: Now It's Serious -- Powerball and Mega Millions to Withdraw » 15 June 2017, 17:48

Powerball, Mega Millions ending in Illinois due to budget impasse, lottery officials say

Lottery players will no longer be able to purchase Powerball or Mega Millions tickets in Illinois after the end of this month due to state lawmakers’ inability to pass a budget, lottery officials said Thursday.

“It is disappointing that the Legislature’s inability to pass a budget has led to this development and will result in Illinois Lottery players being denied the opportunity to play these popular games,” Acting Illinois Lottery Director Greg Smith said in a written statement. “This is why it’s so critical the General Assembly deliver a balanced budget to the governor’s desk that he can sign.”

Lottery spokesman Jason Schaumburg said Powerball will be suspended after the June 28 drawing, and Mega Millions will be suspended after the June 30 drawing.

He would not respond to questions about whether the decision to end sales of the popular interstate games was made by the Illinois Lottery or the organizations that administer the games.

I have noted Illinois issues with the lottery before:

• 10 September 2015: Quick Takes: Who’s Up For Some Taxes? Lotteries, Teachers, and Property Owners, Watch Out!
• 15 September 2015: Public Pension and Finance Quick Takes: Will You Pay My Lottery Bills? Will You Pay my Healthcare Bills?
• 15 October 2015: Illinois Lottery Update, the Pensions, and General Blogging Announcement
• 25 October 2015: Illinois Lottery: You Can’t Fool People Forever

Now, I didn’t get into it then, but the lottery payments got put into one of those cobbled together “stop gap” bills… and again, if I remember correctly (and I don’t care enough to dig into it), they did it again. I believe the lottery winners are still being paid now, but it’s not like Powerball or Mega Millions is really all that interested in getting tied up in Illinois’s issues.

Now, that’s just the multi-state headline prize lotteries. This is not including the itty-bitty scratch-off tickets, which I imagine also makes some money.

HOW MUCH LOTTERY MONEY IS ILLINOIS GETTING?

Keep in mind that the following, which comes from the spreadsheet I developed in my post Geeking Out: How Dependable are Lottery Revenues? And Government Data Sources? , includes all lottery proceeds. I don’t know what percent of this is Powerball or Mega Millions… I did find this very interesting site with extremely old school design, so this may be fun to look at later.

Here are the Illinois lottery proceeds:

WHOA! It popped up quite a bit from 2007-2009, and then dropped down big in 2010.

Let’s check the cash flow situation:

The total cash flow growth looks not quite so rambunctious… but check out the purple bars, which are the admin costs. Those bumped up in 2010. HMMM.

Looking at my data set, of the 33 states where I have data going back to 1992, Illinois ranks 31st, at a compound annual growth rate of only 0.7%. The only two states with worse growth are Louisiana and Ohio (which actually saw its proceeds shrink). State #30 is neighboring state Indiana, which had 1.3% growth per year.

Contrast that to a nationwide increase of 4.5% per year, for 23 years. Makes quite a difference.

Spreadsheet is here.

ILLINOIS LOTTERY LOSS: DROP IN THE BUCKET

In any case, the amount of proceeds from all lotteries in Illinois was only $712 million in 2015 (a 3% decrease from 2014).

What’s the size of all Illinois revenues? About $41 billion. Or $36 billion. Well, close enough.

So the proceeds from lotteries are about 2% of revenues.

But of course, that drop in the bucket would be after all the other drops, affecting Illinois state revenue.

From the May 2017 monthly briefing from th e Commission on Government Forecasting and Accountability:

REVENUE
May Revenues Up, Year-to-Date Remain Weak
Jim Muschinske, Revenue Manager

…..
Despite three consecutive months of
decent growth, with only one month
remaining in the fiscal year, base receipts
are off $955 million, or 3.5%. As
discussed in earlier briefings, receipt
weakness is widespread, and has resulted
in disappointing performances in the key
areas of income and sales taxes as well as
federal sources.

Here is a bit of the year-to-date comparisons:

Let me point out the 40% drop in corporate income tax. That seems like a really big movement.

Sales taxes are flat.

Personal income tax, the largest revenue source, is up 2%. Woo.

BACK TO BUSINESS

While the governor probably didn’t much welcome the lottery news, and probably didn’t help him decide to do this, he’s called the legislature into special session to try to get this done. Maybe.

Rauner calls special session amid gridlock, end-of-month deadline:

Republican Gov. Bruce Rauner has summoned lawmakers back to the Capitol for the final 10 days of June to work on breaking the historic, two-year budget impasse.

The governor took to social media Thursday to announce he’ll call a special legislative session, a move that compels lawmakers to show up at the Capitol, but also allows them to collect a per diem of $111 per day plus 39 cents per mile.

The Democrat-controlled General Assembly left Springfield on May 31 without agreeing on a spending plan to send to Rauner for the budget year that begins July 1.

…..
Now with the clock ticking toward the start of a third year without a budget, Democrats have pushed the idea that the problem in Springfield is Republican resistance to compromise, something Rauner’s legislative allies tried to dispel Wednesday with the unveiling of a wide-reaching legislative proposal.

…..
Meanwhile, the state is at risk of violating multiple state and federal court orders that compel it to write checks with money it doesn’t have. And the lottery agency that runs the multistate Powerball and Mega Millions games is threatening to drop Illinois if there’s no budget by the end of the month.

The continuing impasse threatens to suspend major road projects, as the state will not be able to pay contractors starting July 1, according to the Illinois Department of Transportation.

The department is notifying contractors that all construction work is to be shut down June 30 if the budget situation is not resolved, said IDOT spokeswoman Gianna Urgo. A shut-down would impact $249 million in current projects, including work on the Jane Byrne Interchange reconstruction and Interstate 55 and Lake Shore Drive construction, both in Chicago.

Also Thursday, an appellate court dismissed an attempt by social service providers to have their unpaid bills pushed ahead in line, causing the group’s spokeswoman to suggest that social service providers should rethink doing business with the state. The Ounce of Prevention Fund, run by Diana Rauner, is among the parties to the lawsuit. The group has filed a related lawsuit in downstate St. Clair County.

I’m not particularly sanguine that anybody in the legislature is all that interested in doing the hard work needed. The ideas they’ve come up with so far are about as laughable as the recent Pennsylvania “reform”.

Or the New Jersey stupid idea to pay for their pensions with lottery proceeds. Evidently, the NJ legislature is considering this seriously. At least as seriously as the NJ legislature can consider anything.

DROPS BECOME A BUCKET OF TROUBLE

So sure, the lottery revenue could drop. (There would still be the small prize lottery, which is Illinois-only)

On top of having to shut down roadwork

On top of rating agencies threatening junk status

On top of a lawsuit about paying legislators, when there’s no budget

On top of losing population to neighboring states.

This is the public finance version of Chinese Water Torture

But those drip drip drips are nothing compared to the ocean of unfunded pensions

That tsunami will get you.

Compilation of Illinois posts