Funding natural resources: A fair share?

  • Article by: DOUG SMITH , Star Tribune
  • Updated: October 29, 2008 - 5:01 AM

Lottery revenue never was considered the cure for state environmental and natural resource problems and contributes just a small share.

You've seen the ads touting the Minnesota lottery's contributions to the environment.

And it's true, the lottery -- launched in 1991 -- has directed millions of dollars to the environment and natural resources during the past 18 years.

So why are people pushing for the Clean Water, Land and Legacy Amendment on next week's ballot? That constitutional amendment proposal would increase the state sales tax by three-eighths of 1 percent to fund cleanup of lakes and rivers, pay for fish and wildlife habitat, parks and trails, and arts and cultural projects.

It's because even supporters say the lottery hasn't been -- and was never intended to be -- a panacea to deal with the many environmental and natural resource issues facing the state. Fewer than 12 cents of every dollar spent on the lottery goes to natural resources. Sixty-five cents goes to prizes and commissions, and almost 15 cents goes into the state's general fund.

"People think the lottery dollars are the answers to our problems, but the lottery provides a small fraction of the money needed for environmental issues,'' said former state Rep. Dennis Ozment, R-Rosemount, a 24-year veteran of the Legislature who decided not to seek re-election this year.

Just cleaning up the state's polluted waters could cost $80 million to $100 million yearly for at least the next 10 years, Ozment said. He supports the amendment. About $258 million in lottery funds has been spent on various natural resource projects.

That's an average of about $14.3 million yearly.

"The lottery just doesn't provide enough funds to address critical issues for natural resources," said Steve Morse, executive director of the Minnesota Environmental Partnership and a former state legislator and Department of Natural Resources deputy commissioner. Morse also supports the constitutional amendment, noting it would generate nearly 10 times as much money as the lottery does for natural resources.

Opponents of the constitutional amendment argue the state already generates enough dollars for natural resources. They also object to a tax increase and to using the state constitution to dedicate funding.

"There's not a shortage of revenue, it's how it's being spent," said Phil Krinkie, president of the Taxpayers League of Minnesota, which opposes the amendment.

Supporters counter that the Legislature never has sufficiently funded natural resources, which receive less than 2 percent of the state budget. Morse and others say the lottery's legislative history supports their argument for constitutionally dedicated conservation funding.

Fifty percent of lottery proceeds were originally supposed to go to natural resources. Legislators later changed that to 40 percent and also "taxed" the first 6.5 percent of revenue in lieu of a sales tax and sent the proceeds to the state's general fund.

(Since 2000, 72 percent of that 6.5 percent has gone to fish, wildlife, parks, trails and zoos. The remaining 27 percent still goes to the general fund.)

Amendment supporters also point out that for 40 years, a tax on cigarettes funneled $350 million to natural resources, but legislators diverted that money in 2003 to the general fund because of a budget shortfall.

"Every other fund was raided by the Legislature, but the lottery funds are still there because it was constitutionally dedicated," Morse said.

The Taxpayer's League buttresses its argument by noting that the Environment and Natural Resource Trust Fund has $438 million in it. But the fund was set up to be perpetual; only 5.5 percent of its value -- about $25 million this year -- can be spent annually. (The principle is invested and had been earning about 8 percent annually, but the stock market collapse has caused the fund to lose $27 million in value since June.)

Under the law, lottery funds will stop flowing to the fund in 2025. By then, there should be an estimated $1 billion in the fund, which should generate about $55 million yearly -- forever.

Trust fund appropriation is overseen by the Legislative-Citizens Commission on Minnesota Resources (LCCMR), a group comprised of citizens and legislators. The Legislature and governor must approve the commission's recommendations.

Ozment said the amendment allows voters to decide how important natural resources are to the state. He sees few options. The state is facing another budget deficit. And other issues, such as transportation and health care, always are a priority.

Ozment says the choice is either pay a small sales tax increase now, or pay more later.

"Our environment has the ability to absorb short-term neglect. What it can't do is absorb long-term neglect. If the public doesn't do this now, they will end up paying big sums of money later to try to correct the problem. Because it's not going away.''

For more information, see www.lottery.state.mn.us/etf.html or www.lccmr.leg.mn/

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