Last week, the House approved a lottery leasing plan that would privatize the state-run lottery for half a century and net the Illinois $10 billion in revenue intended for statewide school and road construction. House leaders warmed to the idea when it became clear that no other capital plan compromise was going to be reached, even though it's still uncertain if and how the Senate will deal with the legislation.

In Illinois, any bill that gets through the Springfield gridlock is a welcome sign. But Ralph Martire, executive director of the Center for Tax and Budget Accountability, reminds us in a State Journal-Register op-ed that while the state lottery is currently a major source of education revenue in Illinois, it will gradually dwindle under the lease proposal:

Fortunately, the proposed education trust fund will replace most of the school revenue formerly generated by the lottery, at least initially. Under the proposal, schools will get $600 million a year for about 24 years. But there are problems. The funding starts at $30 million less than what the lottery currently produces, and never grows. So, not only will schools lose out on the $15 million increases the lottery has averaged annually since 2000 (that’s a $75 million shortfall in just five years), but after inflation, the trust fund will in real terms represent a declining revenue source. At some point, the trust runs out of money altogether, creating a funding cliff.

Martire also reminds readers that the lottery is essentially a highly regressive form of taxation -- and is only going to become more so in the hands of a private entity. Research shows that "low-income consumers see the lottery as a convenient and otherwise rare opportunity for radically improving their standard of living," even though chances of winning are infinitesimally small. Not surprisingly, more people seek to radically improve their standard of living during economic downturns. Indeed, the New York Times reported on Friday that of the 42 states with lotteries, at least 29 reported increased sales in their most recent fiscal year:

“I was surprised, because I thought with gas prices up and people not leaving the pump to go into the stores, we’d see a greater impact” on the downside, said Jodie Winnett, acting superintendent of the Illinois Lottery, whose sales increased 3 percent in the last fiscal year and are doing even better this year. [...]

John Mikesell, a professor of public finance and policy analysis at Indiana University, published a study in 1994 showing that from 1983 to 1991, lottery sales tended to rise with unemployment rates.

“The findings were that in slump periods, lotteries historically have gotten a little bump upward,” said Professor Mikesell, who has not analyzed recent lottery data. “It’s taking a shot at getting some relief in hard times. It’s usually not a good gamble, but it’s a dollar, and if they happen to accidentally hit it, it may well change their lives.”

Whoever purchases the Illinois Lottery will have a financial incentive to maximize its profits through marketing. Combined with a struggling economy, poor Illinoisans are going to feel the brunt.

Now, more than ever, the state needs comprehensive and equitable reform of our school funding system and tax structure. Leasing the lottery isn't a sustainable solution.