DES MOINES — Iowa’s state-run lottery is doing great, thanks to two recent mega-jackpots that drove sales and profits, but other parts of the state budget aren’t faring as well under state-quo funding.
Iowa Lottery CEO Terry Rich said the recent $1.537 billion Mega Millions jackpot won by a player in South Carolina and a $687.8 million Powerball jackpots split by winners in Iowa and New York created such as a sales frenzy his operation is about a month ahead of where it normally is.
“It appears we’re going to be around an extra month of profit, around $20 (million) to $25 million ahead of what we were in a normal year,” Rich told Gov. Kim Reynolds during a state budget hearing Thursday. He said that should translate into about $71 million in proceeds to the state treasury for the current fiscal year that ends next June 30.
Rich said the mega-jackpots are a mixed blessing in that they generate a lot of interest but also set up an expectation that’s hard to maintain.
“It worries me a little that we have jackpot fatigue,” he said. “It used to be that at $10 million we had lines out the door; now it’s probably $400 million before the press starts to take a look at it.”
Rich’s enterprise is somewhat unique in that it’s run like a business and doesn’t rely on state general funds to operate, unlike most of the other government functions where managers are struggling with a directive to once again present status-quo budget requests for the 2020 fiscal year that begins next July 1.
Iowa Attorney General Tom Miller, who like Reynolds was elected to a four-year term in last week’s midterm election, said years of flat state funding or midyear cuts have created what he described as a “perilous” situation for the state’s Department of Justice.
Because of inadequate funding, he said, there is not enough money to cover the costs of working with county attorneys on criminal cases, working to uphold criminal convictions that are appealed and representing the state against civil lawsuits.
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“Earlier this year, we really had a crisis or a semi-crisis in representing the state in civil litigation,” Miller told the governor during his budget hearing. “A whole sort of ‘perfect storm’ came at us. I was extremely concerned, and we worked through that, at least temporarily, but we’re just teetering on what the citizens of Iowa want us to do and expect us to do.”
To “avert total disaster” over the past two years, Miller said, legislators gave him authority to use proceeds from legal settlements paid to the state by companies accused of bilking Iowa consumers to make up for shortfalls in other areas of his office’s budget.
“Our budget has been cut repeatedly, and it’s difficult to have enough people to do everything that we want to do,” Miller said in an interview, noting his office has roughly the same number of attorneys as five years ago but is dealing with about 40 percent more cases. “There’s a real struggle to keep up the high quality of work that we’re doing.”
Miller is asking the governor and legislators for a $500,000 boost in fiscal 2020 and a $1 million increase in his agency’s budget for the following fiscal year to help remedy the situation.
Also Thursday, Donna Mueller, CEO of the 360,000-member Iowa Public Employees’ Retirement System, said investments made in the past year had a 7.97 percent rate of return, increasing the IPERS trust fund to $32.3 billion.
The system paid $2.1 billion in benefits to eligible retirees and has a ratio of assets to liabilities of 82.4 percent — an improvement of about 1 percent over fiscal 2017, Mueller said, and reported a deferred investment gain of $487 million.
Given current conditions, she does not expect participants will see high contribution rates, and some may see a slight reduction.
Chris Kramer, acting director of the state Department of Cultural Affairs, requested a status-quo general-fund budget for the next two fiscal years, but asked for more than $56 million in Rebuild Iowa Infrastructure Fund money to renovate the State Historical Building near the state Capitol.
Kramer said the $28.4 million is fiscal 2020 and $27.6 million in fiscal 2021 would be used to make needed upgrades to protect art works, cultural artifacts and historical treasures housed at the downtown site.
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In the current budget, she said, her agency had maintenance money to replace pipes and drainage and to make improvements to the roof and skylight.
But she hopes work could commence in July to install vapor barriers and upgrade heating, ventilation and air-conditioning systems to create a safe, controlled environment within Iowa’s “flagship” museum.
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