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Lottery Ruling Seen Having Little Impact on Wis. Schools

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Wisconsin officials last week were planning to release $29 million in general funds to balance the state school-aid account after a judge declared that the state cannot use lottery proceeds to finance education.

Officials said the decision will have little impact on schools, since the state can afford to tap its reserves for the funds. They added that the ruling also resolves ambiguities about whether state funds spent on schools can be considered a form of local property-tax relief.

Bob Lang, the state's legislative budget director, said school districts "won't know the difference'' in terms of finances in the wake of the judge's ruling. That sentiment was echoed by Wisconsin education association leaders.

Judge's Decision

In his ruling, Dane County Circuit Judge Michael Nowakowski held that the state cannot use lottery revenues to support schools. The state constitution, he noted, mandates that such revenues be used for local property-tax relief.

Gov. Tommy G. Thompson, who prompted the ruling when he asked that $83 million be transferred from the state lottery to the state general fund to be used this year to support education, initially said last week that he would challenge the ruling. He later said he would abide by the decision.

The suit was filed by Senator Russell Feingold, who contended that lottery funds were being misspent.

In its early years, lottery proceeds had been used to support school districts. Beginning last year, however, lawmakers undertook a campaign to "buy back'' the lottery by dedicating it solely to easing local residential-property taxes.

Last year's effort by lawmakers was thwarted by the Governor, who vetoed a $183-million transfer from the general fund to the lottery fund, as well as other revenue measures, and was then forced to tap lottery proceeds to balance the state budget. To make the connection to property-tax relief, the Governor said that the transferred funds should be dedicated to education, a move that sparked the lawsuit.

In his ruling, Judge Nowakowski said the maneuver was unconstitutional not only because it provided no direct property-tax relief to Wisconsin residents, but also because its indirect tax benefits were more likely to replace sales- and income-tax revenues, which make up the bulk of the state's general fund.

State officials said last week that the decision's practical effects will be minimal.

Of the $83 million transferred by the Governor to balance last year's budget, the state will be forced to halt the remaining $29-million final payment. The decision will boost the lottery's balance by that amount, while requiring officials to appropriate the same amount from the state's budget reserves.

"This is more a political issue than a policy issue,'' said Tom Fonfara, a senior policy adviser to Governor Thompson. "The money will be there.''

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