The State of Alabama has more needs than its current revenue can provide. In some areas of the State infrastructure is crumbling and our State prisons are horrendously overcrowded, according to a Federal judge. One often touted idea for a source of new funds is a state lottery. In fact Alabama is one of only six States without a lottery, and most of the other five either have other gambling interests (i.e. Nevada and Mississippi) or tourism (Alaska, Hawaii and Nevada again) to help bolster their States’ coffers.
The Alabama Legislature, which, includes many new faces this year, is perhaps more likely than ever to pass some measure to increase revenue. The tradeoff seems to be this: pass an unpopular fuel tax and hope voters forget about the short term pain before the next election or put a widely popular, but controversial, measure on the ballot for a lottery and let the people tax themselves. Of course these ideas aren’t mutually exclusive and the legislature could do both.
There has been heavy resistance to letting the voters decide the lottery question in the legislature, but polling indicates Alabamians are for it. So if the legislature doesn’t pass, or doesn’t raise enough revenue through, a fuel tax and also does not want to let the people vote on a lottery then what is the solution?
In their January newsletter the Retirement Systems of Alabama (RSA) called on Alabama legislators to legalize marijuana and sports betting - two vices that already have high demand in the state but, because they are technically illegal, contribute no direct revenue to the State coffers.
Thirty three states plus Washington D.C. have already legalized either medical or recreational marijuana and the result has been billions of dollars in tax revenue. Of those 33 states 10 have legalized recreational marijuana. California lead other states in 1996, the same year a lottery proposal failed in Alabama, as the first state to legalize the compassionate use of marijuana. At the time the law required examination by a doctor and a medical card stating that the person had a legitimate medical need for cannabis. In 2016 that barrier was removed and California legalized marijuana for recreational use, though it was not the first State to do so. Two thirds of the States in the USA, including Utah in 2018, have legalized marijuana for either medical or recreational use. Of the 17 States that have not legalized it three - Idaho, Kansas and Nebraska - don't even have standing laws addressing marijuana-related use.
Sports betting is another longtime recreational pursuit that is about to see a huge boom. Last year the Supreme Court of the United States (SCOTUS) struck down a 1992 Federal law, the Professional and Amateur Sports Protection Act, that outlawed sports betting in all but a few states. This is expected to open the floodgates for an industry that is estimated to be worth $150 billion per year. According to the RSA’s piece, which cited Fortune magazine, there are currently six states were sports betting is fully legal with another three on the way and fifteen more with bills pending.
Advocacy of such pursuits by David Bronner, CEO of RSA, may be eye opening, but remember that Bronner’s organization is designed to make money for the RSA’s pension funds and many of the organization’s most visible assets are focused on the realm of leisure and sports activities including golf courses, spas, and hotels - pursuits that could fit hand-in-glove with legalized marijuana and sports betting.
But all of this is likely to fall on deaf ears among Alabama legislators according to Steve Flowers, a well-known political pundit and former representative in the Alabama House.
“They (RSA) may be advocating that, but the legislature moves very slowly and very conservative body and I’m just not sure they would address either of those things,” Flowers said.
It has been 22 years since the last time Alabama voters cast ballots on the question of a lottery and since that time none of the perennial attempts to put the lottery on the ballot have succeeded. Flowers says that it is likely the issue could resurface this year.
“I think people, especially Republicans, want to vote on a lottery. It is not so much that they want to play the lottery themselves, but they are tired of seeing Alabama’s dollars cross the State line to be spent on lotteries in other states. I would put the chance of seeing a lottery bill pass the legislature and make it on the ballot at 50/50. Adding sports betting to that would be logical, but I don’t think they would do it. I don’t think they would lift a finger to legalize marijuana at all. If the legislature passes a lottery bill it would probably be this year. Anything controversial is more likely to be passed in the first year of the quadrennium,” Flowers said. Flowers added that he expects if a lottery bill were to go on the ballot for voters to decide it would likely pass with 65-70% of the vote.
There has been plenty of talk for the last couple of years about raising the gasoline tax, specifically to address infrastructure. One such attempt died before it had a chance last year, most likely because of proximity to an election. Flowers believes a gasoline tax is likely to pass in this first year of the quadrennium giving angry anti-tax voters four years to forget about it before they go to the polls again. However Flowers said there will be figurative knife fights over who exactly gets the money as counties vs municipalities and rural vs urban scuffles emerge.
At the end of the day Bronner’s call to legalize marijuana and sports betting is probably a bit of political theater to encourage legislators to put a lottery measure on the ballot. But if all three measures were on a ballot together might Alabamians well approve them all? After all voluntary taxes are more popular than non-voluntary ones. Moral objections to vice might seem less pronounced in the presence of good roads and well funded schools.