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Republican legislative leaders Thursday suggested Iowa sell its lottery to the state public employee pension system instead of private investors.
Responding to a column published this morning by The Des Moines Register’s David Yepsen, Senate Minority Leader Paul McKinley, R-Chariton, said it appears some backroom deals have been made and Gov. Chet Culver and Democratic leaders are intent on selling the lottery to private investors. Instead, the state should consider selling it to the Iowa Public Employees’ Retirement System, known as IPERS, McKinley said.
“This is only a scheme to get some very short-term financial gain for some long-term budget pain,” McKinley said. “There are other options that we should pursue, and one of those options that we’re pursuing is that the IPERS board look into buying the lottery.”
Selling the lottery to IPERS would pump needed cash into the state budget and would provide support for many of Iowa’s retirees, McKinley said.
House Minority Leader Kraig Paulsen, R-Hiawatha, said Republicans don’t think the lottery should be sold, but if it is, the deal should not be limited to big Democratic donors. Dan Kehl, an Iowa casino operator who is heading a consortium that hopes to lease the Lottery, donated $25,000 to Culver in 2007.
“If we are looking at that, we need to ensure everyone gets the opportunity to bid on it, and if the rate of return is 17 percent, that sounds like a good deal for IPERS and they need to look at that,” Paulsen said.
Paulsen admitted that he has not seen a proposal to sell or lease the lottery and that all the details he has seen have come from newspaper speculation about what the plan may look like. He is, however, meeting with an attorney next week to try to better understand the mechanics behind selling something like a state lottery.
“The numbers I’ve seen, which from a large extent come just from reading your paper, since we don’t have a formal proposal, the numbers don’t add up,” Paulsen said.
IPERS manages a multibillion-dollar investment portfolio that finances the retirement benefits more than 300,000 Iowans. Since July it has lost more than $4 billion in the stock market.
McKinley said if the reported numbers are true, the lottery would generate $200 million up front for the state and 17 ½ percent revenue to IPERS, a figure he said is “safer than the stock market and has a greater rate of return.”
Culver’s office did not respond to a request for comment.
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