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HomeMy WebLinkAboutAgenda Report - October 3, 1984 (62)M"ICATIM ClTf CLERK I City Clerk Reimche presented information regarding Pmpo- si t ion 37 - California State Lottery which had. been recei-vad. No formal action was taken by the Council on the matter. :T C- f KS.-, % k -i Alx 3. ?" �' -`i Y 4jp - F J (a MEETING CITY COUNCII. - OCTOBER 3, 1,984 {� M"ICATIM ClTf CLERK I City Clerk Reimche presented information regarding Pmpo- si t ion 37 - California State Lottery which had. been recei-vad. No formal action was taken by the Council on the matter. :T C- f KS.-, % k -i Alx 3. ?" �' -`i Y 4jp - F J (a i E UESTIONS AND NSWERS About ProP osition 37 CA[If ORNIA STATE LOTTERY E Are th re any state -operated lotteries in the Ej California s constitution must be changed to establish a state lottery. 0 Now is that done? By voting yes On Proposition 37 on the November ballot. How much money would a California State lottery raise? Conservative estimates put the gross ti;,cet sales at about S1.7 billion in the first year. That's Conservatin? Here's how it was calculated: TWO western states that recently started lotteries were used as a base. Washington's per capita sales (S59.26) and Colorado's (S71.97) combine for an average of S65.62. This was applied to Californias population for the first year's sales. Result: S1.7 billion. HOW would the lottery Income be divided? No more than 16% could be spent running the lottery — with at least 113 of that going to r:.. "ailers in ticket sale commissions. The re- maining 10% to 11% would cover all other ex- penses — administration, security, ticket pro- duction and distribution, promotion and such. One-half the total income would go back to the public in prizes. The balance — at least 34% — would go for public education. But education would actually get con- siderably ^lore. and all the unspent portio, -, of allowable operating expenses to education. This could add another 61'% of the gross sales. Thus, education would get about 400,0 of the gross, or 469,t of the net income. That would put more thar, S680 million in new rnonev into educatirn in the first year alone [� In view of the huge size of California's budget, will the lottery funds that go to public education really be significant? DYes, indeed! It will equal all the state's income last year from horse racing, alcoholic bever age taxes and liquor license fees, cigarette taxes, estate and gift taxes put together --- with more than S140 million left over! 0 You say this lottery money will go to education. But wont the state just cut back its school and- college appropriations and let education depend almost entirely on the lottery] No — because you, the People of California, declare right in the Act you pass, that your in- tent is to provide additional money for our schools. So what does that mean,? It means that, whenever necessary, the courts can be called upon to enforce the in- tent of the People. This carries tremendous legal weight. Expert legal opinions confirm that it's enforceable. Q How will the Pducation money be divided? An Pqual amount wil! go for every equivalent full-time student in California public schools — kindergarten through university. LarlKfir h 0 How comeI 0 Because the lottery Act allocates, with minor exceptions, the unredeemed prize money united States now? yes — in 17 states. 0 Are they profitable? /■� yes — all of them. What about California? Ej California s constitution must be changed to establish a state lottery. 0 Now is that done? By voting yes On Proposition 37 on the November ballot. How much money would a California State lottery raise? Conservative estimates put the gross ti;,cet sales at about S1.7 billion in the first year. That's Conservatin? Here's how it was calculated: TWO western states that recently started lotteries were used as a base. Washington's per capita sales (S59.26) and Colorado's (S71.97) combine for an average of S65.62. This was applied to Californias population for the first year's sales. Result: S1.7 billion. HOW would the lottery Income be divided? No more than 16% could be spent running the lottery — with at least 113 of that going to r:.. "ailers in ticket sale commissions. The re- maining 10% to 11% would cover all other ex- penses — administration, security, ticket pro- duction and distribution, promotion and such. One-half the total income would go back to the public in prizes. The balance — at least 34% — would go for public education. But education would actually get con- siderably ^lore. and all the unspent portio, -, of allowable operating expenses to education. This could add another 61'% of the gross sales. Thus, education would get about 400,0 of the gross, or 469,t of the net income. That would put more thar, S680 million in new rnonev into educatirn in the first year alone [� In view of the huge size of California's budget, will the lottery funds that go to public education really be significant? DYes, indeed! It will equal all the state's income last year from horse racing, alcoholic bever age taxes and liquor license fees, cigarette taxes, estate and gift taxes put together --- with more than S140 million left over! 0 You say this lottery money will go to education. But wont the state just cut back its school and- college appropriations and let education depend almost entirely on the lottery] No — because you, the People of California, declare right in the Act you pass, that your in- tent is to provide additional money for our schools. So what does that mean,? It means that, whenever necessary, the courts can be called upon to enforce the in- tent of the People. This carries tremendous legal weight. Expert legal opinions confirm that it's enforceable. Q How will the Pducation money be divided? An Pqual amount wil! go for every equivalent full-time student in California public schools — kindergarten through university. LarlKfir h 0 How comeI 0 Because the lottery Act allocates, with minor exceptions, the unredeemed prize money Fol How do- we know that the lottery money will be spent for such essentials as salaries, text- books and equipment? Because the Act specifically declares the lottery money must be spent exclusively for educational purposes and none may be used for land purchases, building construction Or research. Are there any other restrictions on how the money may be spent? No. That's all subject to local control — by the respective school boards, by the State Univer- sity and Colleges Board of Trustees and by the University of California Board of Regents. El What can this additional money do for our elementary and high schools? Elit can provide very welcome relief to many local school districts that are now near bankruptcy. El Have lotteries been used to raise money for education in the past? 0 Yes. lotteries helped finance such schools as Princeton, Harvard and Yale. Currently, net proceeds from lotteries in Michigan, New York, New Jersey, New Hampshire and Ohio go to public education. How about organized crime and the state lotteries? There has not i;Yzen one instance of Infil- tration by orga►itzed crime. El Don't the lotteries c+rain away food and rent money from people in the poverty income levels? I've heard that poor people are more Inclined than others to buy lottery tickets excessively. That's been proved wrong by numerous studies in lottery states showing low-income citizens buy fewer tickets proportionately than their percentage of the population. it is the middle-income people, not the poor, who play lotteries in the greatest proportion. �.r HOW about kids. Can they play the Ottery? No. California would prohibit the sale of tickets or payment of prizes to anyone under 18 would establishment of the California State Lottery interfere with church/charity bingo games? © Absolutely not. How about those draw -poker parlors that are legal in some parts of California? E3 They would not be affected. Could money from the General itax) Fund be used to help run the lottery? No. There will be a temporary line of credit for start-up funds. This must be repaid to the state's General Fund — with interest — within a year. In most states, this has been done much sooner. In Washington, the state's General Fund was repaid in full within 30 days of the start of the lottery ticket sales. El But couldn't the lottery come back later for snore of the taxpayers' money. if it needed it? No. The Lottery Act prohibits other appropriations, loans or other transfers of state funds" to the lottery. 0 Who will run the californiastate Lottery? QThe state, itself. A lottery director and the California State Lottery Commission, which will consist of five members, will be ap- pointed by the Governor, subject t.- Senate confirmation. [� political cronies of whoever is Governor. Right? 3 Hardly. The Lottery Act prohibits the Gover- nor from appointing more than three com- missioners from the same political party. r Q couldn t some fasttalking crooks hoodwink that group of citizens on the commission? it would be difficult. one commissioner must have at least five years of law enforcement experience and another must be a Certified Public Accountant 0 What about financial safeguards? QNumerous strict watchdog provisions are included in the Act. For example: Monthly and quarterly reports of the lottery opera- tions and all financial transactions must be submitted to the Governor, Attorney General, State Controller, State Treasurer and Legislature. In addition, the Controller is required to conduct quarterly post -audits of all accounts and transactions and an independent firm of Certified Public Accountants must be en- gaged to conduct an annual audit. E Are there any protections to keep the drawings honest? D There certainly are. Here are some very im- portant provisions of the act: • Drawings must be conducted in public. No tickets may be drawn by lottery employees. • Drawings must be witnessed by an inde- pendent Certified Public Accountant. • A videotape and audio tape record of every drawing must be made and preserved. • All equipment used In a drawing mUSt be inspected by the independent CPA and a lottery employee before and after each drawing. • Lottery commissioners. employees and their spouses, children, brothers, sisters and parents are not allowed to purchase tickets or receive prizes. 0 will lottery tickets be sold by street vendors cluttering the sidewalks as in some other nations? No — only by established retail outlets. 0 Are there any restrictions so hiring the lottery staff? I L r C3 Yes. The lottery security dlvislonli5 required to investigate the qualifications of all pros- pective employees. No one who has been convicted of a felony — or any gambling - related offense whatever — may serve as a lottery commissioner, officer or employee of the lottery. is an independent law enforcement agency involved in assuring lottery securtw Yes. The Act makes it mandatory for the deputy director in charge of the security divi- sion to confer with the Attorney General and his deputies to assure "the integrity, security, honesty and fairness of the lottery." El How are sales agents compensated? E3 They retain a commission on each ticket sold. in most states, Lottery Commissions have set this at 59/t�. Some also pay volume incentives. 0 I've heard about people who won a million dollars or more in lotteries in other states. is that it — a million dollars or nothing? QNo. The lottery is not a pie -in -the -sky scheme. Of course, It's great to become an instant millionaire, but more people play for enter- tainment and the chance of winning some of the far more numerous smaller prizes. 0 Now numerous and what kind of smaller prizes? 0 in a typical recent Instant .game in Washington State, there were more than 6 million winners — ranging from free lottery tickets to such cash prizes as S2, S5, S25 and upward through S1,000, S10,000 and more. The grand prize was 51,000 -a -week for life with a guaranteed S1 million. El will California State Lottery winners have to pay state income taxes or any local taxes on their winnings? 0 No. Winnings are exempt from state and local taxes but they will be subject to federal income taxes. P00,1CHECKPOINTS Under this Initiative, our State $00014 Constitution, for the first time, would outlaw gambling casinos In California. Only the voters could change that. Off-limits to kidst No one under 18 could buy a lottery ticket, or receive a prize. P0014 Studies show low-income people buy the fewest lottery ticket* per capita. Middlo-Income, earners buy the most- Except ost Exc*pt for a short-term line of credit for start-up, no state tax money could ever be used by the lottery. P000, The Lottery Act would not Interfere with churchicharity bin -go games or draw pokor now legal In parts of the state. SUM6 236 CALIFORNIANS FOR BETTER EDUCATION 1308 Old Bayshore Highway, Suite 200 Burlingame, California 94010 r �- YESI want to help pass Proposition 37 - the State ! Lottery! I will help by: You may use my name publicly UI Being a community speaker j Contacting friencts & neighbors Making a donation of $ Wnting letters to editors Distributing literature i. Working on a special event Working on election day Phoning radK)ITV talk shows Signature Name Address City ___Zlp.C(x)nty_ Home Phone Work Phone Occupation Employer Business Address Republican L" Democrat Indeperxient 1"; School-age children) Yes "L.'; No.'L-J' Paid for by Californians for Better Educalim, Barry Faclem. Treasurer Californians forgetter Education 19 -September -84 Mr. Ron Stein City Attorney 221 W. Pine Lodi, CA 95240 Dear Mr. Stein,: Public education is one of the most important services provided by government. Today,_ however, our schools are chronically underfunded. This problem demands our immediate attention. As a representative of your community's: concerns, it is essential that you take the lead in addressing this problem Californians For Better- Education has organized lin support of the California State Lottery Act --the "Lottery For Education.." The initiative, which will be on the November ballot, will provide significant financial support to California publi=c education. All of the net revenue generated annually from the lo=ttery estimated at $680 million in the firs=t year - will 90 directly to local school boards and governing bodies. Also, the Act exp icitty requires that the lottery revenue be used as, supplementary futding for California schools. there is widespread support for the initiative. A California Poll shows that 17% of all Californians support a- lottery. Over one million Californians signed petitions to put the initiative on the ballot. Already, the San Franc sco, San Diego, San Jose and Oakland Board=s of Education have endorsed the initiative. California schools must be adequately funded. Today, they are not. A state lottery, whilenot the for €oour- schools' financial troubles, will go a long way in our continuing. effort to provide the additional funding California Schools so crucially need. I have enclosed information on the initiative. Your support would be very valuable in our attempt to provide a reliable and additional source of revenue for our schools. I look forward to speaking with you soon. SinWdpresentative Ron F- 1308 Old Bstiyshcre Hwy., Suite 200 Burlingame. CA 94010 (415) 57£-7077 SEP 21 1-84 1720 E. Garry, Butte 236 Santa Ana, CA 92708 (714) 281-2484 0 1. 4 ELECTED OFFICIALS ENDORSE PROP 37 SUPERVISORS: Geoirge Barber, President, San Joaquin John Begovich, Member, Amador Sal Cannella, Member, Stanislaus Ernest Carpenter, Member, Sonoma Rod Diridon, Miaber, Santa Clara John George, President, Alameda Jay Goetting, Supervisor -elect, Napa Daniel Hamburg, Member, Mendocino Willie Kennedy, Member, San Francisco Becky Morgan, Member, Santa Clara. Harold Moskowite, Member, Napa Wendy Nelder, President, San Francisco Charles Santana, Member, Alameda Toes Torakson, President, Contra Costa Mel Varrelman, Member, Napa Doris Ward, Member, San Francisco MAYORS: City of Tracy Oscar Brownell, City of Seal Beach Jonathon Cannon, City of Garden Grove William Cunningham, City of Huntington Park Rotea Gilford Deputy Mayor-,. City of San lrancisco Dan Griffin, City of Buena Park Alex Guliani, City of Hayward Shirley Lewis, V. Mayor, City of San Jose Carrey Nelson, City of Brea Richard Partin, City of Cypress Robert Pokorny, V. Mayor, City of Vacaville Verne Roberts, City of Antioch Randall Ronk, City of Stockton John Sutton, City of Brea Charles Sylvia, City of Los Alamitos J. Tilman Williams, Mayor Pro -Tempore, CITY COUNCIL MEMBERS: Blanco Alvarado, City of San Jose Jerry Estruth, City of SanJose Cole Eyraud, City of Desert Hot Springs Susan Hammer, City of San Jose Robert Henning, City of Lynwood Dick Hildebrand, City of walnut Creek William Jennings, City of Santa Monica Barbara Kondylis, City of Vallejo Milt Krieger, City of Garden Grove Mary Moore, City of Oakland Ray O'Neal, City of Bellflower A. Ronald Perkins, Culver City Pete Schouten, City of Dixon Earl Sherburn, City of Palmdale Iola Williams, City of San Jose (over) City of Garden Grove 21 COUNTY DEMOCRATIC AND REPUBLICAN CENTRAL -COMMITTEES: San Francisco County Democratic Central Committee Shasta County Democratic Central Committee Frank Ammerman, Chair, Tehama County Democratic Central Committee Rudy Cardenas, Chair-, Imperial County Democratic Central Committee Gary Carmichael, Orange County Republican Central ComrA-ttee Mary Mahoney, Chair, Contra Costa County Democratic Central Committee Marge Morris, Calaveras Democratic Central Committee Chris Portway, Chair, Riverside County Democratic Central Comm ttee SCHOOL BOARDS: Berkeley Board of Education Bolinas/Stinson Board of Education Carlsbad Board of Education Dixon Board of Education, Emery Board of Education Forestville Board of Education Martinez Board of Education Moorpark Board of Education Oakland Board of Education San Diego Board of Education San Francisco Board of Education San Jose Unified Board of Education San Lorenzo Board of Education Vacaville Board'of Education OTHERS: Robert Campbell, Assemblyman, 11th District Joseph Montoya, Senator, 26th District Robert Naylor, Assemblyman, 20th District Joseph McNamara, Police Chief, City of .San Jose MEDIA EMDORSERENTS: San Francisco Chronicle San Francisco Examiner KG -TY S. F. KNBC-TY'L.A. KABC-TY E.A. KHJ-TV L.A. KNK-RADIO S.F. Beverly Hills Courier Freaont Argus "ard Daily Review Yuba City Valley Herald Antelope Valley Press (.Lancaster) Gardena Valley News -Tribune Kingsburg Recorder Poirtola Reporter/Feather River Bulletin F St. Helena Star r. Californians forBetteY• I• Education ® 0 -ft CALIFORNIA STATE LOTTERY GENERATES NEAPtLY $700 ON FOR PUBLIC EDUCATION AND MORE TE AN $850 MILLION TO PRIZE WDUiERS IN FIRST YEAR ALONEI In May, a record number of signatures of California voters were submitted to the Secretary of State to qualify an initiative for the November ballot. This initiative will seek the creation -of a state -operated lottery to benefit public education.. As you know, California is facing ever-increa-sing problems in meeting the critical financial needs to support our public education a system which has always ranked among the best in the nation. The creation of a state lottery to provide additional, supplementary money for education is a viable method of fulfilling this financial need. In a recent California Field' Poll, 771 of California voters favored a state -operated lottery. Clearly, the voters of our state overwhelmingly support the concept of a state-run to tory for public ed-ucation. Seventeen states have tined to lotteries as a successful method of generating revenue since New Hampshire established the first lottery. in 1964. Nat onvide, lottery, gross sales have raised $202.2 billion since then. In Pennsylvania alone;., fiscal year- 1983 gross sales were $883 million. The projections for California show public education would receive more This amount is equal to the state' alcoholic beverage taxes and liquor and gift taxer combined,. plus $140 BENEFITS TO PUBLIC EDUCATION that after expenses and prize payment, e than $680 million in the first year. s income last year from horse racing, license fees, cigarette taxes, estate million. Provisions in this California lottery initiative require that net proceeds from the California state operated lottery be spent exclusively for public education -- K through 12, community colleges, the State University and Colleges and the University of California -- to be allocated to each educational level on the basis of ADA (average daily attendance) and, when applicable, full-time equivalent enrollment. This money will go directly into the California State Lottery Education Fund -- without need for legislative appropriation or approval. The State Controller will send state warrants directly to each school district and the respective governing bodies of the California State University and Colleges and the University of California. (over) 1308 Old Bayshore Hwy.. Suite 200 1720 E. Garry, Suite 236 Burlingame, CA 94010 Santa Ana, CA 92705 (415) 579-7077 (714) 261.2464 Each education level will be assured new money for education each year. Based on -the ADA and full-time enrollment allocation system, this would mean an estimated $127 new dollars for each full-time equivalent student in California. On the basis of this year's enrollment figures., KA2 levels would- receive approximately $539 million,; community colleges. $93 million; State University and Colleges, $31 million and the University of California., $18 million. UNIQUE_ FEATURES; THE Z. -MV, TER, ACT Q r 1984 —Public education will have a suaran-ttod source of supplm"wri4v_y income. --Money will go directly to each school district-. the Board- of Regents and Board of Trustees. Local public education officials "rill control the purse strings. Funds received must be spent for education purposes, not for capital improvements, land purchases or research. —This tremendous source of supplet income is a condoning and'r - source of revenues. —The Act also places a constitutional prohibition on Nevada and New Jersey - type casinos. --The lottery would be run by a lottery director, and the California State Lottery Commission, which will consist of five members, all appointed by the Governor, subject to Senate confirmation. No more than three sewers of the Commission may be from the same political party. —Each educational level will be assured a portion of the lottery proceeds,. WE HOPE YOU WILL JOIN CALIFORNIA VOTERS IN THEIR STRONG SUPPORT FOR ADDITIONAL MONEY FOR PUBLIC EDUCATION. CBE4 5/2/84 Californians � forgetter 1! Education THE POOR AND STATE LOTTERIES Opponents of state -oriented lotteries claim that people from lower-income households buy a disprc.portionate number of lottery tickets and. thus, intensify the effects of their poverty. Dependable studies, however, show that this simply is not true. Here are some examples: WASHINGTON: The State of Washington has conducted demographic profiles of state lottery players since inception of its lottery games. A 1983 report declared: "The 'poor' and the 'uneducated' are not buying tickets at above-average rates ... Those with household incomes between 0 and $5,000 played 3.3% less than their percentage of the pop.lation and tisose is the $5,000 to $10,:000 category played 14.5% lebs... The greatest play in relation to their propor- tion of the state's population came from the $25,000 to $30.000 income brack- et. Those players participated at a rate of 20% higher than their proportion of the state's population." CONNECTICUT: The Hartford Courant summarizing a 1981 study by Economic Re- search Associates wrote: "Results of the study showed that legalized gambling (state lottery) does not create compulsive gambing...add to the state's welfare roils....cayse increased bankruptcies ... or deprive families of life's necessities." NEW YORK, PEENSYLVANIA ILLINOIS, MICHIGAN., NEW JERSEY New Orleans Mayor Ernest.N. Mortal, in an article published in the Baton Rouge Sunder Advocate of November 21, 1981, wrote in part: "Research shows that persons from middle-income households are the most active lottery participants. Studies conducted in five (lottery) states (New York, Pennsylvania, Illinois, Michigan and New Jersey) show that the highest level of pa-rticipants are from those with incomes between $18,000 and $34,000 per year. And in each state, the lowest levels of partclpat ion. are from households earning less than $11,000 per year. "It is the middle class, not the poor who play lotteries in the greater proportion." DELAWARE: A study conducted by the University of Delaware College of Business and Economics in 1979 found just 11 percent of families earning less than $1-0,000 participated in lotteries and the median income.of families buying tickets was $19,200. COLORADO: Colorado State Lottery Director Owen Hickey. reporting on first- year (1983) demographic studies: "The lottery is really the game of males and females between 25 and 55 with household incomes between $18,000 and $36,000 and they have 11 or 12 years of school." Research Summary 6 May 10, 1984 1308 Old Bayshore Hwy., Suite 200 1720 E. Garry. Suite 236 Burlingame, CA 94010 Santa Ana, CA 92705 (415) 579-7077 4MVP (714) 261-2464 Californians � forgetter Educat40 ion 0 CRIME AND STATE LOTTERIES Do State -Operated Lotteries Attract Organized Crime? Recent declarations by officials in the states which operate lotteries and the 1971 findings of a task force commissioned by then -California Attorney Gen- eral Evelle J. Younger to study legalized gambling agree there is no organized crime involvement and they attribute this fact primarily to tight security mea- sures and the absence of profit opportunities to reward criminal intrusion. Reporting on New York. the task force sums up findings of those who have probed the question: the New York State Lottery created virtually no law enforce- ment problems; and, the New York operation is trustworthy and untainted by any serious attempt to corrupt the lottery or lottery officials. "The primary reason for this," t;^e task force reported, "is that there is not sufficient profit available to organized crime groups to make protacted in- volvement in the state lottery attractive to organized criminal gr')ups." The task force's findings are further supported by recent observations of past and present officials of lottery -operating states: OHIO -- Edwin C. Taylor, Executive Secretary, Ohio Lottery, 1981: "We have no known infiltration by organized crime, although there were many accusations and innuendos at the beginning of the Ohio Lottery in 1.974." MASSACHUSETTS Dr. William E. Perrault, Executive Director, Massachusetts ,otcery, 1981: "The record of (state) lotteries in the United States for the. past 18 years has not had one incident of association with organized crime..." MICHIGAN -- Gus Harrison, former Commissioner, Michigan State Lottery: "Lot- tery opponents invariably argue that organized crime gleefully awaits the instal- lation of state lotteries. I can categorically and and unequivocally detty this. Neither Michigan nor any state, to my knowledge, has had any difficulty in this regard." PENNSYLVANIA -- Lynn R. Nelson, Executive Director, Pennsylvania Lottery, 1981: "There has been no evidence, not even an allegation. that organized crime has infil- trated any of the state -operated lotteries in the United States." DELAWARE -- Ralph F. Batch. Director, Delaware Lottery, 1981: "During my lot- tery experience in New Jersey, Illinois and Delaware, I have neither directly nor indirectly encountered any evidence whatsoever of any infiltration or resemblance thereof by any crime into the affairs of (state) lotteries." NEW HAMPSHIRE -- James M. Kennedy, ;"ormer Director, New Hampshire Sweepstakes Commission: When New Hampshire authorized the first state lottery in 1963, "Oppon- ents made dire predictions of crime infiltration ... Stringent security measures were implemented from the beginning and there has never been any pose)bility of infiltration by the criminal elements." 1308 Old Bays.hore Hwy., Suite 200 Burlingame, CA 94010 (415) 579-7077 :, Research Summary 7 May 10, 1984 1720 E. Gam -j, Suite 236 Santa Ana, CA 92705 (714) 231-2464