|Date Requested:January 23, 2014
Time Requested:12:55 PM
| FUND(S) |
Sources of Revenue
|Other Fund State Excess Lott Rev Fnd|
Legislation creates:Neither Program nor Fund
Effect this measure will have on costs and revenues of state government.
| Beginning July 1, 2014, the bill calls for a fifteen percent reduction in certain statutory distributions of lottery revenues that have always been made outside of the budgetary process and before funds are deposited to the Lottery Fund, State Excess Lottery Revenue Fund, or other Lottery funds. After the reduction is made, the resulting funds are directed in the bill to be deposited to the State Excess Lottery Revenue Fund.
The bill also reduces the distribution to the Infrastructure Council beginning July 1, 2014, from $40 million to $20 million, for a period of three years.
The bill does not result in the generation of additional sales or revenue, but it does redirect approximately $19 million to the State that was formerly not available for appropriation as well as the reduction of $20 million from the Infrastructure Council for a total of $39 million for expenditure through the appropriation process.
|Effect of Proposal||Fiscal Year|
|1. Estmated Total Cost||0||0||0|
|Repairs and Alterations||0||0||0|
|2. Estimated Total Revenues||0||0||0|
3. Explanation of above estimates (including long-range effect):
There is no anticipated additional cost or revenue associated with this bill. It is a mechanism to redistribute revenue through the budgetary process where in prior years the distributions were made according to statute and outside of the budgetary process.
| In addition to providing the state approximately $39 million total for use in budget appropriations that would otherwise have been directed by statute to other entities, the bill provides a secondary benefit to the state as it relates to bond coverages. As Lottery revenues have declined, the debt service coverage ratio, which measures annual debt service as compared to annual revenue, has also declined. To compound the situation, additional bonds have been authorized but not issued. If the new bonds are issued, the coverage ratio is projected to drop below 4 times coverage.
In December 2013, Standard and Poor's downgraded its outlook for School Building Authority Excess Lottery Revenue Bonds from "stable" to "negative." This means that S&P could lower the bonds' rating from AAA within two years. To help avoid a downgrade, this bill proposes a 15% reduction of certain statutory distributions of Lottery proceeds to direct $19 million to the Excess Fund for FY2015. This additional revenue will enable the Excess Fund to meet the 4 times debt service coverage for FY2015 that S&P expects even with the additional debt service of the bonds authorized but not issued.