REDUCE the payout rate, increase the sales. Increase the sales, increase the payout.
Reduce tax rates and tax revenues, increase economic growth. Increase economic growth, increase tax revenues.
These two formulas follow a nearly identical line of thinking, but those who support one tend to oppose the other.
The first involves the state lottery and the requirement that education get an automatic 35 percent payout of lottery profits. The second involves state personal income taxes. Conservative Republicans tend to oppose lowering the lottery payout rate but support lowering the top income tax rate.
The Oklahoma Lottery Commission has tried for years to reduce the education payout, claiming that it results in lower prizes and that lower prizes result in lower sales of lottery tickets. The argument is that by reducing the education payout rate, prizes will rise, ticket sales will rise, profits will rise and education will get more money from, say, a 30 percent payout than it's getting from 35 percent.
In the tax arena, the argument is that a lower income tax rate will stimulate economic growth, incomes will rise, tax revenue will rise and the state will get more money from, say, a 4.75 percent maximum tax rate than it's getting from the current 5.25 percent.
Both propositions are based on assumptions that may or may not prove true. That alone is no reason to oppose them. However, a reduction in the lottery's education payout rate is problematic. The people approved the lottery and the payout formula. Changing the formula is best done by the people, not by legislative fiat.
So far the Legislature has been cool to the idea of a payout change. Conservative Republicans opposed the very concept of a state lottery when it came before voters in 2004. Nevertheless, the proposition passed with about 65 percent of the vote. Opposing a formula change now may be related to opposition to the lottery in general more than it is to the payout change in particular.
Talks continue on proposals to reduce or even eliminate the state personal income tax. Such discussions dominated the 2012 legislative session, but the session ended in May with the top tax rate at the same place it was in February.
A third of state government — the House of Representatives — is under new management. The House, the Senate and the governor all seem inclined to cut income taxes but aren't on the same page. The Legislature seems disinclined to change the lottery payout.
The Oklahoma Lottery has generated $500 million for education so far. It's a solid source of revenue for common schools and higher education, but it could perhaps be a bigger source if the payout formula were changed. That's not the commission's call, however, and we're not sure it's the Legislature's call either — other than putting a formula change on the ballot.
The commission has been cutting its payroll and advertising expenses and will reduce the percentage retailers that sell lottery tickets get to keep. These steps pale in significance to a payout formula change for education.
That's all the more reason to let citizens decide for themselves if they believe cutting the education payout rate will actually increase the payout to education.