Cut lottery commissions.

Byline: The Register-Guard

At a time when Oregon is facing a budgetary shortfall in excess of $2.7 billion for the 2003-05, jeopardizing vital public services ranging from education to public health, the 2003 Legislature has an obligation to turn every stone in search of savings or revenue. Senate Bill 279 would increase state income by reducing overly generous lottery commissions, and the bill should be passed.

Sponsored by Sen. Tony Corcoran, D-Cottage Grove, SB 279 would reduce Oregon Lottery Commission payments to retailers that provide space for lottery games, particularly the highly profitable video poker games. Retailers' commissions currently average 32.5 percent of net proceeds; SB 279 would reduce their take to 15 percent of the profits.

There are 1,970 retailers - mostly taverns, bars and restaurants - in Oregon that house video poker machines. Last year, the retailers' total take from commissions was $153 million. The average retailer makes $79,000 a year in commissions. As Register-Guard reporter David Steves noted in a recent article, the average income from lottery commissions for the 102 highest volume lottery retailers was $200,000 last year. Three of the retailers, all of them in Portland, topped $300,000 in commissions.

SB 279 would reduce the retailers' total commissions by an estimated $75 million a year. In light of a $2.7 billion budget shortfall, $75 million may not seem a lot. But it could go a long way toward relieving the pain for schools, parks, natural resources and economic development.

Under the current Lottery Commission scale - a scale due to expire in June 2004 - retailers receive 35 percent of net video poker sales up to $200,000; 30 percent of net sales from $200,000 to $400,000; 25 percent of net sales from $400,000 to $600,000, and 20 percent of net sales from $600,000 upward.

SB 279 was the subject of a public hearing Thursday by the Senate Rules Committee and there was testimony from both sides. Proponents argued persuasively that the commissions are too high and the monetary need too great for state services to retain the current commission levels.

Opponents - led by the Oregon Restaurant Association, which represents lottery retailers - argued that the bill would threaten the productive partnership between lottery retailers and the state. That partnership, the ORA said, has produced millions of dollars - about $330 million annually, to be exact - for needed state programs. Too, said the restaurant association, some retailers simply couldn't make it without the commissions.

It's difficult to believe that providing space and an electrical outlet for video poker machines is all that keeps some retailers afloat. One wonders how they survived before voters created the lottery in 1984, and how they made it until video poker was introduced a decade later.

Vital state programs are being cut to the bone. Reducing the lottery commissions would soften those cuts. Lottery retailers would continue to make tens, even hundreds, of thousands of dollars in commissions. SB 279 is a no-brainer. It should be passed and signed into law.