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Salem business Journal

november 2006

lottery dollars – Above Aboard and Underground Capitol Report: Tim Buckley

It appears that individual Oregonians are less hooked on gambling than is the government sponsoring the games. Lottery spokesman Chuck Baumann said that while revenue from the State’s gaming sources is up almost 17% in the past fiscal year, the percentage of “people at risk for problem gambling” is holding steady at less than 3%. Unfortunately, the Lottery’s half-billion dollars a year contribution to crucial services and infrastructure can’t be found elsewhere. Fortunately, it is available.

When the games began in 1985 (they “turned 21” this year!) all the revenue was dedicated to state economic development. Baumann reminded me that in ’85, Oregon’s economy was nearly flat lined. Two statewide ballot measures passed, one in 1995 and another in ’99, split the revenue

pie four ways. Cutting the property tax dramatically in 1990 forced us to dip heavily into state revenue to pay for schools. Hello Lottery! Today, K-12 education gets 67% of net gaming funds; economic development gets 17% and the rest is split evenly between State Parks and watershed enhancement, including Salmon habitat rehab.

While reducing the slice for economic development is irksome, it can be argued that spending heavily on education is, in itself, a viable and important element of long term economic development strategy. Since 1985, Lottery revenue has exceeded $4.6 BILLION. More than half that amount ($2.7 B) has gone into education since 1995. Economic development has received $1.57 B since the games began. One percent is earmarked for problem gambling programs,

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though Baumann pointed out that the Legislature has not always allowed the funds to be spent there, instead using the funds for other purposes.

In the Mid Willamette Valley, economic development funds from Lottery earnings comes from a number of sources: through the Department of Community and Economic Development directly, through the Governor’s Strategic Reserve Fund, via the Special Public Works Fund, the Industry Sector Outreach program, through Chemeketa Community College and the Small Business Development Center and through the Marion County Council of Governments. (for more info on this galaxy of options, see www.bizcenter.org or www.

econ.state.or.us) Tom Fox is




Development Officer for the mid-Valley. He said that “business expansion, recruitment and retention” accounts for a large share of the Lottery money here. The recent announcement by Garmin AT (Aviation Technology) to invest $10 million in plant expansion is due, in part, to the availability of Lottery funds for productivity studies at the plant and to develop training for an estimated 90 new employees in Salem. Without that show of support, Fox said the expansion could well have gone to Garmin’s plant in Taiwan.

Fox said that Lottery dollars are often targeted to manufacturing companies rather than, say, retail businesses. His explanation was a bit complex, but he suggested that manufacturing jobs often pay better wages and, more importantly, each manufacturing job helps sustain at least three other local jobs in supply and support businesses.

Wachovia, which is not a manufacturing business, nevertheless provided another good investment according to Fox. To assure that the regional call center could deliver its promised jobs, Lottery dollars helped build an electronic commerce classroom at Chemeketa Community College. The program prescreened possible employees and then trained 150 in advance of the center’s opening. Wachovia delivered on its promise (they now employ about 550 people there).

Supreme Truck in Woodburn got Lottery funds to build a bigger building for line production. The net effect: the company

moved a part of their production to Oregon from California. In all cases, said Fox, the company matches the Lottery dollar investment on an “8 or 10 to 1 ratio.”

The City of Salem’s Mill Creek Industrial Park on Cordon Road has also been on the receiving end of low interest loans guaranteed by the Lottery revenue. Fox said that when “good paying jobs” are created, the State will forgive a portion of the loan.

Also in the Valley, a consortium of food processing companies (known as “cluster development”) got funding to do employee training that increases their productivity and, thus, their economic opportunities.

And here are a few more instances of Lottery investment in the Valley:

  • *

    Upwards of a million dollars a year is

invested through “local partnership boards” at the Mid Valley Council of Governments

  • *

    Collectively, small towns band together

to offer large municipal public works bonds, backed by Lottery funds. The State Infrastructure Bank loans $30 million – $50 million a year for sewer and water projects

  • *

    The Business Development Loan Fund

works with banks in credit guarantees for businesses to expand.

Unlike those few percentile that gamble and get addicted, businesses seem to have a perfect record in the Valley, according to Fox. “I’ve been here seven years and I’ve yet to see a default. And I’ve never been undersold on the jobs creation piece,” he added.

I still carry in my wallet, the sole Megabucks ticket I bought this year, back in March. I’ve yet to check whether or not it was a winner. I’m a bit ashamed to admit I’m not doing my part to fund local economic development much less education. Well, like with addicts, at least I’m admitting I have a problem, right. And I’m writing about it, right? That’s healthy, right?

Tim Buckley is a freelance writer, editor and corporate communications advisor. He can be reached at tbucktoo@comcast.net

Dean Craig, Branch Manager dean@personnelsource.com

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