Mahan: Where does the Hoosier Lottery money go?

Posted by: Samantha Holifield  | Friday, March 3, 2017 10:51 am

Recently, I have received many questions about the Hoosier Lottery from members of our community. People want to know exactly where the money goes, and why it cannot be put toward funding our roads and bridges. The fact is that these funds are already accounted for and are used to finance a number of worthy efforts.

First, the operational expenses of running the Hoosier Lottery have to be addressed. These expenditures include the costs of prize payouts, ticket printing and promotional advertising.

In 2016, there was approximately $290 million remaining after paying for those expenses. This excess revenue is then distributed into three separate funds: the Indiana State Teachers’ Retirement Fund, the Pension Relief Fund and the Build Indiana Fund.

The Indiana State Teachers’ Retirement Fund and the Pension Relief Fund each receive about 10 percent of the surplus. On average, this totals nearly $30 million annually and is used to cover any possible shortfalls in teacher, police officer and firefighter pension systems.

The remaining 80 percent of the excess revenue goes to the Build Indiana Fund. This fund collected over $250 million from the lottery last year. More than 90 percent, or about $236 million, of this money goes into the Motor Vehicle Excise Tax Replacement Account. This account replaces the revenue lost to counties after the late 1990s when the legislature cut vehicle excise taxes roughly in half. This refund is still itemized on your vehicle registration when you renew your license plates. Once in this replacement account, the state auditor distributes the money proportionately across Indiana counties. The counties can then use this money for any purpose they see fit. This can range from local road repairs to various public safety improvement efforts. The money remaining in the Build Indiana Fund, usually around $14 million per year, then goes to a variety of important projects across the state. These projects include improving internet connectivity in local schools and libraries.

While it may initially seem like the lottery is a viable solution to resolving our state’s transportation infrastructure issues, there are a few problems with this concept. Revenue the state makes from the lottery already helps fund all of these commendable priorities. We want to make sure the teachers, police officers and firefighters that have dedicated their service to Indiana and have invested in our pension programs are taken care of. It is also important to fund local improvement projects to keep Indiana cities and towns thriving for Hoosiers.

Additionally, the Hoosier Lottery does not generate anywhere near enough annual revenue to sustainably cover our road funding shortfalls. To be clear, the lottery was never intended to be a long-term solution for our current and future transportation infrastructure needs. This is why the House of Representatives passed House Bill 1002, which sets forth a plan that is researched and data-driven. The legislation rests upon the conservative user fee principle: the more one drives, the more one pays. It is sustainable and more effective than looking to the lottery for revenue.

If you have any further questions about the lottery and road funding, please do not hesitate to contact me at 317-234-9499 or h31@iga.in.gov

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State Rep. Kevin Mahan (R-Hartford City) represents

portions of Blackford, Delaware, Grant and Wells counties.

A high-resolution photo of Mahan can be downloaded by clicking here.