Friday, January 25, 2013

The Pennsylvania Lottery proposal shouldn't surprise anyone

What's with this sudden burst of surprise and indignation over the Corbett administration's move to hire a private management firm for the Pennsylvania Lottery?

The effort has been going on for almost a full year, right out in the open, with meetings, announcements and press releases explaining how a private management contract will increase benefits to senior citizens by billions of dollars.

Just because the media wasn't listening doesn't mean we weren't talking. Last year, on April 2 to be exact, the Department of Revenue issued a news release saying that it would seek qualified bidders for a contract to operate the lottery. Gov. Tom Corbett himself was quoted: "This initiative is simply part of my administration's efforts to tap private sector innovation to make state government work more efficiently and effectively, which is precisely what taxpayers expect."

Some newspapers even editorialized in favor of the idea, saying that if private operators can guarantee more money for the state, at a lower cost to taxpayers, everybody wins.

Between March 27 of last year and Jan. 14 of this, the administration met, conversed or otherwise communicated with legislators of both parties about the lottery privatization effort. Three Cabinet secretaries testified before the House Committee on Aging and Older Adult Services in April of last year. In fact, our outreach data show how public an effort this was:

• "A printed report issued in April, detailing the plan and its timeline.
• "Meetings or phone conversations with at least 127 legislators.
• "Ten 'milestone updates' to either the entire General Assembly or its staff.
• "Twenty-three letters responding to inquiries.
• "Public testimony at two legislative hearings."

On Friday of last week, the administration announced that it had issued a statement of intent to award the contract to Camelot Global Services LLC , a procedural move that freed the Department of Revenue of confidentiality clauses in the bid so it could discuss the proposal in detail before the state Senate Finance Committee.

Cue the opponents, led by leaders of the union representing state lottery employees. They screamed that the proposal was a last-minute rush, done under cover of darkness. One called an email issued at 4:23 p.m., "a midnight raid."

It sounds exciting, makes for zesty reading, but it simply isn't true. Camelot's contractual pledge to generate $34 billion in profits over a 20-year period, backed by $150 million in cash collateral and a $50 million letter of credit, puts the lie to claims that Pennsylvania's seniors would lose out under this proposal. In truth, the private management contract takes the sale of a product to a venue where selling is done best: the free market.

Lottery employees affected by this change have received assurances from Camelot that it will seek to hire as many of them as possible. Gov. Corbett, too, has pledged to do his best to find places for those who do not make the shift to Camelot.

No lottery employee need end up jobless under this proposal. Those who are not hired by Camelot are assured that the administration will make the best effort to find another position for them within the commonwealth.

By 2030, one in four Pennsylvanians will be over 60. In other words, 25 percent of our population will need the very services the lottery underwrites. As it now stands, the lottery is not equipped to meet that demand. Camelot's offer provides that assurance.

No, the Pennsylvania Lottery is not broken. But it's headed toward some very rutted road and it's time to install a stronger set of springs.

Now we finally have everybody's attention about why we need to act. We should have had it sooner and would have if the current alarmists had paid attention to what was happening around them.
Daniel P. Meuser is Pennsylvania secretary of revenue.
First Published January 17, 2013 12:00 am

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