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State Journal: Squid row; Ad angst

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Riddle of the week: How are squid and the concept of legislative intent alike?

Answer: Each is often hidden in a cloud of ink, and also plays a role in a new controversy in California over school fund-raising activities.

Traditionally, sales of food and other items by volunteers to raise money for the schools were exempt from California sales taxes.

A few years ago, however, the legislature passed a law that included a list of organizations, such as the Boy Scouts and 4-H Clubs--but not school groups--that were specifically exempted from sales taxes.

The consequences of the change were unnoticed until recently, when tax auditors discovered that a high-school wrestling team from Monterey had made thousands of dollars selling fried calamari at a local fair.

State officials argued that the team owed tax on its sales, on the grounds that the legislature's list replaced the previous blanket exemption for school groups.

The team and its allies disagreed, however, arguing that the legislature had intended the list to be in addition to, rather than instead of, the existing exemption.

But a state tax panel rejected the team's position, potentially forcing school groups throughout the state either to pay taxes or to apply for an exemption.

Educators have worried for several years about the effects of state lottery systems on political support for education funding.

Since the voters know that lottery profits go to the schools, the theory goes, they may be less willing to back bond issues and tax increases for education--even though the lottery money was originally intended to supplement, rather than replace, existing sources of funds.

So when the Florida lottery commission recently began running television commercials highlighting the $1 billion a year it contributes to the schools, Commissioner of Education Betty Castor got concerned about the effects on public attitudes.

The legislature last year directed the lottery board to do more to inform Floridians about the educational role of the lottery.

The problem, Ms. Castor said in a letter to the lottery board last week, is that the ads fail to follow the law by making clear that lottery funds represent only about 10 percent of the state's education budget.

"On the contrary, it is simply another lottery promotion with the effect of telling the public that it is pouring an ample supply of dollars into education," she wrote.--hd

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