CHARLESTON, W.Va. -- A proposed 15 percent cut in some West Virginia Lottery appropriations is needed not just to balance the 2014-15 state budget, but to maintain a AAA credit rating for state bonds backed by Lottery revenue, Revenue Secretary Bob Kiss told the House Finance Committee Monday.
"It's a cut these laudable programs are being asked to make to help with the current budget," Kiss said of a Tomblin administration proposal to cut most Lottery statutory funding accounts to free up $19 million in Lottery revenue.
The statutory accounts are Lottery appropriations that are written into state law, in most cases designating percentages of Lottery profits that are to be automatically transferred to the accounts.
In the 2013 budget year, statutory accounts totaled $226.8 million, with thoroughbred and greyhound racing subsidies accounting for $87.6 million of that total.
Kiss said in addition to freeing up $19 million to plug holes elsewhere in the budget, that revenue will count toward bond debt service coverage ratios for a number of state bonds backed by Lottery revenues.
"The real significance in this legislation is to deal with the debt ratios," he said.
In order to maintain AAA ratings for the bonds, Lottery revenues available for legislative appropriation need to be at least four times the amount needed to cover debt service on the bonds.
The pending issuance of $52.5 million of Lottery bonds for improvements at Cacapon and Beech Fork state parks will put Lottery revenue below that ratio, if the $19 million is not taken out of the statutory accounts, Kiss said.