The following is a transcript of the proceedings on the Senate floor when the North Carolina Senate enacted House Bill 1023 — North Carolina State Lottery Act.

The date was Tuesday, August 30, 2005.

Senator Tony Rand (D-Cumberland): Madame President.

Senate President Beverly Perdue: Senator Rand for what purpose do you rise?

Senator Rand: Send forth a committee report.

Senate President Perdue: The Senator may send forth his committee report and the clerk will read.

Senate Clerk: Senator Rand for the Committee on Rules and Operations submits to the Senate the following report: Favorable on House Bill 1023 — North Carolina State Lottery Act.

Senate President Perdue: Calendar

Senator Jim Forrester (R-Gaston) Madame President.

Senate President Perdue: Yes, Senator Forrestor. For what purpose do you rise.

Senator Forrester: I have a point of order regarding the bill that was just read in as to whether that bill is legally before us from the House. I base that on the North Carolina Constitution, Article 2: Section 23...in that the bill was read second and third readings on the same day in the House. And the bill should have had recorded readings for second and third readings. It was only recorded for second reading. It was a voice vote on third reading. I would submit to the President and the President Pro Tem and the Rules Chairman that that bill be sent back to the House for a correct reading on that bill on third reading.

Senate President Perdue: The President rules that the bill is clearly and properly before us.

Senator Forrester: I question the decision of the Chair and I ask for the "ayes" and "nos" on that ruling.

Senate President Perdue: The "ayes" and "nos" will be shown.......(pause). You've got enough. Let's vote it. The ruling on the President having been challenged, we will....(pause)

Senator Rand: Would you frame the issue, Madame President, so we will know if an "aye" vote is to sustain the Chair or if an "aye" vote is to reverse the Chair.

Senate President Perdue: An "aye" vote allows the lottery to be before you. A "no" vote sends it back to the House...My ruling is that it will be before us. See you're challenging my ruling on that issue.

Senator Martin Nesbitt (D-Buncombe) Madame Chair

Senate President Perdue: Yes sir.

Senator Nesbitt: Point of order.

Senate President Perdue: Yes sir.

Senator Nesbitt: Does the challenge of the ruling of a Chair require two-thirds vote?

Senate President Perdue: Senator Rand?......(pause)

Senate President Perdue: Simple majority........(long pause)

Senator Rand: Madame President

Senate President Perdue: Senator Rand

Senator Rand: Senate Rule 10A...It said that two thirds vote of the membership of the Senate present voting is necessary to sustain any appeal from the ruling of the presiding order....So it would take a two-thirds vote to over rule.

Senate President Perdue: It would take two-thirds to over rule.

Senator Fletcher Hartsell (R-Cabarrus): Madame President

Senate President Perdue: Senator Hartsell for what purpose do you rise?

Senator Hartsell: I'm a little bit slow. Would you restate the issue that's before us for the vote...just so we know.

Senate President Perdue: The issue that Senator Forrester challenged was my ruling that the lottery is properly before us. We called for the "ayes" and "nos." And so...if you want to support my ruling then you vote "aye." If you want to send the bill back to the House, you vote "no." That's the question before the Senate. All those in favor will vote "aye" .... opposed "no." Five seconds will be allowed for the vote and the clerk will record it. (Vote takes place) Twenty-nine having voted in the affirmative and nineteen in the negative, my ruling has been sustained....And now we're back to the bill. Put it on the calendar....

Senator Hugh Webster (R-Alamance): Madame President

Senate President Perdue: Senator Webster for what purpose do you rise?

Senator Webster: Inquiry of the Chair

Senate President Perdue: Senator may make his inquiry.

Senator Webster: When was this bill read in?

Senate President Perdue: About five minutes ago? You mean from the House?

Senator Webster: Yes

Senate President Perdue: April 7th.

Senator Webster: To the floor of the Senate?

Senate President Perdue: On April 7th it was read in and sent to Rules.

Senator Webster: Read in and sent to Rules and Rules reported it and it got a favorable report from Rules...when?...

Senate President Perdue: Yes

Senator Webster: When?

Senate President Perdue: They reported it out today.

Senator Webster: Today?

Senate President Perdue: Yes sir

Senator Webster: Is it being put on the floor for consideration now under the suspension of the rules?

Senate President Perdue: Yes sir

Senator Phil Berger (R-Rockingham — Senate Minority Leader): Madame President

Senate President Beverly Perdue: Senator Berger for what purpose do you rise?

Senator Berger: I would renew my objection to any suspension of the rules that was interposed earlier in the session.

Senate President Perdue: Senator Berger, I'm just going by the rules that we adopted last Tuesday in our marathon session. We agreed that we would put anything that came in straight on the calendar for the remainder of the session and some of your members went back and listened to the tape. And that's what we have done since last Tuesday. So if you want to challenge my ruling you are welcome to do that.

Senator Hamilton Horton (R-Forsyth): Madame President

Senate President Perdue: Yes sir, Senator Horton

Senator Horton: It is correct that we did go back and listen to the tape. And I think it was clear that it was applied to that day only.

Senate President Perdue: Yes sir, there was a second challenge to my doing it. I think maybe that Senator Stevens...I'm not sure who did it...As we brought it back out on Tuesday, I clearly asked if we wanted to go ahead and make it pertain to the whole session. I've had my staff listen to the tape today and I believe that what I am saying is accurate. And so if anybody wants to challenge that ruling they may do that and we will vote it.

Senator Berger: Madame President

Senate President Perdue: Senator Berger for what purpose do you rise.

Senator Berger: Object to the ruling of the Chair. Request the "ayes" and "nos."

Senate President Perdue: Call for the "ayes" and "nos." Call for the "ayes" and "nos" having been sustained we'll vote it one more time. I know the rule now. It's two-thirds to over rule me. That's the question before the Senate....

Senator Berger: Madame President

Senate President Perdue: Yes sir

Senator Berger: If I might just make sure that we understand. Is a "yes" vote to over rule...a "no" vote a vote to sustain?...or is it the other way around? Because the motion was to over rule the Chair.

Senate President Perdue: A "yes" vote will support my ruling on the delay of the session....the way we were going to pass the bill from House to Senate...the fact that we were going to not allow for any other normal procedures in the House and the Senate to be in play. The ruling "yes" supports my ruling from the Chair.....Further questions?

Senator Andrew Brock (R-Rowan): Madame President

Senate President Perdue: Yes sir...Senator Brock

Senator Andrew Brock: I believe the motion that was stated was to over rule the Chair. So therefore a "yes" vote would be to over rule the Chair.

Senate President Perdue: Let me get the language....(pause)...I'm sorry. Yes, you are correct. If you want to over rule the chair, you vote "aye." If you want to support the Chair, you vote "no." Five seconds will be allowed for that vote and the clerk will record it...(Vote takes place)...Nineteen having voted in the affirmative and twenty-nine in the negative, the motion has failed.

Senator Berger: Madame President

Senate President Perdue: Senator Berger for what purpose do you rise.

Senator Berger: To make a motion.

Senate President Perdue: The Senator has the floor.

Senator Berger: Madame President, I would move that the bill currently under consideration...the one that was just read in from the Rules Committee...House Bill 1023...I believe it is...be postponed until May 9, 2006. That's a motion under rule 19-5.

Senate President Perdue: I've got the rule Senator Berger. I want to be sure we know what we are doing.....(long pause).

Senator Rand: Madame President

Senate President Perdue: Senator Rand for what purpose do you rise?

Senator Rand: To speak on the motion.

Senate President Perdue: The Senator has the floor to debate the motion.

Senator Rand: I would hope that we would vote "no" on this motion. Ladies and Gentlemen of the Senate, we need to resolve this issue so that we can go forward. So I would ask you to vote "no."

Senate President Perdue: The Senator asked that you vote "no." The motion is clearly and legally before the Senate. Is there further discussion or debate on that question?

Senator Webster: Madame President

Senate President Perdue: Senator Webster for what point do you rise?

Senator Webster: Point of order

Senate President Perdue: The Senator has the floor.

Senator Webster: We had a suspension of the rules earlier. Now suspension of rules normally are only effective for a day — given day — or a specific period of time. Did you...Did I hear you say that our suspension of the rules is for the rest of this session? And if so, are they for the rest of the 2005-2006 session?

Senate President Perdue: Senator Webster, I believe the dialogue around the suspension of the rules and doing that to the entire end of the session meant to say the end of this session. But if you would like to ask that question, I think it should be from now on. I think it works pretty well....The truth be told, I took the ruling to be to the end of this session...not to the signy die of the biennial session. Further questions? Hearing none the motion before the Senate is to move to a day certain. All those in favor vote "aye" ...opposed "no." Five seconds will be allowed for the vote and the Clerk will record that one. (Vote takes place) Twenty having voted in the affirmative.....Senator Alran....

Senator Austin Alran (R-Catawba): "Aye" please, thank you.

Senate President Perdue: "Aye." Twenty-one having voted in the affirmative and then twenty-seven in the negative. The motion has failed. And now members of the Senate the question before the Senate is the passage of House Bill.....Senator Rand...Would you like to debate the bill?

Senator Rand: Yes mam.

Senate President Perdue: I thought you might...Senator Rand. I thought we might just sneak it on through.

Senator Rand: We would. We could. But the Governor, I don't think he'd sign it unless we voted on it.

Senate President Perdue: I don't think so either.

Senator Rand: Madame President and ladies and gentlemen of the Senate. The issue we have before us, of course, has been talked about a great deal. And I think most everybody in here is aware of how they will vote. And certainly there wouldn't be many surprises, I wouldn't think. But I think its time for North Carolina to join the other States — all the southeastern states around us have the lottery. We are supporting schools in other states that are badly needed here. This matter will contribute about eight million dollars a year to my county to build schools. The County Commissioners have been considering a hundred million dollar bond issue to do that. This will greatly help the property tax payers of Cumberland County because that would be the equivalent of about five cents on the property tax. It will do a great deal to to fund the Pre-kindergarten programs and reduction of class size in North Carolina. And we all know what Pre-kindergarten programs...North Carolina and Mississippi were the only States in the South that didn't have Pre-kindergarten programs. So we all know what that will mean.

And then, of course to fund scholarships for needy students in our University system is one of the best things that I think that we can do. The money has been leaving North Carolina. It's time we kept it at home. It's time we moved our educational system forward to help the men and women of North Carolina. And this will also help the property tax payers of North Carolina. So I ask your vote on the motion. Thank you.

Senate President Perdue: Further discussion or debate?

Senator Brock: Madame President

Senate President Perdue: Senator Brock for what purpose do you rise?

Senator Brock: To see if Senator Basnight would yield for a question.

Senate President Perdue: Will the Senator yield?

Senate President Pro Tempore Marc Basnight (D-Dare): Absolutely.

Senator Brock: At what time were we notified of this special session?

Senator Basnight: This isn't a special session. This is the session that we have been in this year. At four o'clock on Friday I notified all members of the Senate...my office did...that we would be holding session today on any of those issues that were available for consideration.

Senator Brock: Follow up?

Senate President Perdue: Follow up, Senator Basnight? He yields.

Senator Brock: Were all Senators contacted?

Senator Basnight: All Senators were contacted or their offices.

Senate President Perdue: Further discussion or debate?

Senator Brock: To speak to the bill.

Senate President Perdue: The Senator has the floor to debate the bill.

Senator Brock: I think the Lieutenant Governor used a pretty good word when she...when we first started talking about debating the bill...when she used the word "sneak" — to try to "sneak" this bill through. I think we have one Senator who is at home...just been recently hospitalized in the bed. We have another one who was on a honeymoon because it was postponed. When we found out that we had an adjournment resolution that we would conduct no further business for the rest of this year. Whether he was contacted or not, I don't know. But I do not think that it is good policy for the Senate to act in this way. I believe that it reflects poorly upon all of us and upon the State of North Carolina. But the issue at hand is the lottery bill. Now all the other States are doing it and as your parent's would say, " If ever all your friends jumped off a cliff, would you?" I think we as a State should say, "no." And there are three reasons why. Number one, Economics. You can look at it as a tax. It's the most inefficient tax possible that you could have. If you want a tax for the school's Senator Rand, then put a tax on something. Don't make an inefficient tax where another company would get rich. We know that the money that is taken out of the...taken out of the pockets of the people creates a long term effect that you can see through the gas station owners and other places that would sell it where they lose revenue because people will buy a lottery ticket instead of gasoline or a soft drink or a nab or something in the store...instead of making 20 cent on the dollar...they are now making five or six. We know what it will do socially. It preys upon the poor. In fact one of the best arguments that can be made about this comes from Governor Easley's own Budget Director, Dan Gurlach. In Dan's former career, he worked for a gaming commission. And in fact, he said one reason why he left...in 2001 when he made this comment at Guilford Technical College... that the lottery proceeds we all know will go down over while because the shinyness will wear off of it. And people will stop playing. And a memo that was sent to his office, which was in New York — another State on the East Coast that has it — saying you know what — our revenues are down — please increase your funding to low income areas at the end of the month and at the beginning of the month. And I believe he tendered his resignation because of that. I with he would still speak on it today because I think it was so good...such a great argument against the lottery on how it preys on the poor. That saying that instead of working hard, buy a ticket — this is your ticket to easy street. And we say we use it for education? This is the lesson that we teach our children. Don't study hard. Don't do your homework. You know, play the numbers. Play the lottery. Maybe you'll hit it big. Maybe you'll get struck by lightening. And it says that it goes for education? The company that runs the lottery, if you know, if you have looked at their records of what they do, they're the ones that make the money, not the States. Take a look at where else they have a lottery, it's just not on the East Coast, it's in other countries. In Central America and South America....And I don't believe we have children leaving the State of North Carolina in droves to go to a college in South America...because we know the lottery doesn't work. What does it do in other States? Look at Florida before they had lottery. I think they have passed every bond, maybe except for one, and now it is so tough for a State to pass a bond when it needs the money for schools. Because if you ask people when they come out of the polling...I've come from the polls on election day...What makes you vote for that bond? The lottery is going to take care of it...the lottery is going to take care of it. Senator Rand, you said eight million dollars would go to...say...Cumberland County... for a new school? Maybe half. So much a new school costs...maybe half...its not a whole lot of money. In the grand scheme of things, it's not a lot of money going to each of the counties that we're promising all these board of educations and all the children...that the lottery is going to take care of everything. The debate that this will save education...the same thing was made on the ABC Board...that the sale of alcoholic beverages will save our school system and we would have more than enough money to take care of all the needs that we have in education. But I look at it through another...another point....there is only one company that is going to run it. In Article I — Section 34 of our Constitution forbids monopolies. Are we going to allow other lottery companies to come in?...with different circumstances where the money goes. I think there is a lot of questions to be asked about this bill and not to be rushed through...when people are in bed...when people are ill...when people are out of contact...we are sneaking this bill through...you're sneaking it by the people...you're not telling them all...all of what the lottery has in for them. It creates an addiction to gambling. May I just tell one short story. The place where I used to work...a guy won the lottery. He didn't win much, but he won it. And I remember one day we were asking him: Are you going to go up and play the lottery. You know the jackpot is getting pretty big up there in Virginia. He said absolutely not. I will never ever play the lottery again. Today I did not win much. But I was up in Virginia not too long ago and I was driving back through and I stopped at the same place and said: Who knows Lightening might strike twice. So he was in the store and he saw a family to come in...come into a little convenience store. You could tell they didn't have much. They didn't have much money. And he was watching two little boys go around the store and he saw one of them go back to the back corner to grab some milk. When he went up to the counter where his Dad was checking out, he said: Dad...Daddy, can I have some milk. And the father slapped him and knocked the milk out of his hand and said, "No, we need to buy lottery tickets." Now this is not a...(indistinguishable) award, it's a true story. I think what it creates a is a sense of false hope on those that can least afford it. I think it creates a sense of stability for our education system that will not exist...and we know it. It has not existed in other States. And you look at other places and they always use other State's for models. I look at one in Georgia...everybody uses Georgia...they have the hope scholarships. I knew a guy who got it one time and he was bragging to me how he got a hope scholarship. I said your mother is a doctor, your father is an attorney, I would think that you of all people could probably afford college. But if you look at the demographics in Georgia of who plays the lottery — the poor black people. And I told them...here's a rich white country club guy that went to a scholarship on the backs of poor working families. And I think by using this it's just a political game. I think it's a poor choice for the State of North Carolina. I think it's one that we'll regret in the future. I urge you to vote against House Bill 1023.

Senator Berger: Madame President

Senate President Perdue: Further questions or debate. Senator Berger for what purpose do you rise?

Senator Berger: Point of order.

Senate President Perdue: Senator has the floor to ask for a point of order.

Senator Berger: Well...Madame President, I know that everybody came in here today expecting the lottery bill to be taken up for consideration. And I know that's why we have this audience that we don't normally have. But I don't have a copy of the bill here. It wasn't on the calendar. Could we get copies of the bill passed out?

Senate President Perdue: Yes sir. They are up here. I was waiting for somebody to ask for them Senator Berger. I had mine. I thought perhaps you wanted yours. Thank you.

Senator Webster: Madame President

Senate President Perdue: Senator Webster for what purpose do you rise?

Senator Webster: To speak to this bill.

Senate President Perdue: Let's get the copies sent out, Senator Webster. Hang on just a second.

Senator Webster: Well...that would be nice, but I thought maybe we were ignoring that rule too.

Senate President Perdue: We're getting them out.

Senator Webster: And Madame President

Senate President Perdue: Senator Webster just a second until members get their copies, please.

Senator Basnight: Madame President

Senate President Perdue: Senator Basnight for what purpose do you rise?

Senator Basnight: Let me ask that a letter of contact that I mailed from my office in explaining for Senator Brock's purposes...he was called on Friday afternoon. I wanted to make sure that everyone knew that this could occur. And everyone was contacted and so that the information would be on your desk so that you fully understand that it was totally fairness in making certain every member knew that we would be coming to town on Tuesday...and that anything was available...this or anything else to be considered. I'll just hand that out so you can see who was contacted and who was not.

Senate President Perdue: Senator Webster has the floor.

Senator Webster: First, I would like to ask what addresses they used.

Senate President Perdue: Senator Webster you have the floor to debate the bill.

Senator Webster: Madame President, I would like to...before I debate the bill...I would like to issue notice that I do seek...wish to object to third reading on this bill...if we are observing that rule....not ignoring that one. And yes, I would like to debate this bill.

Senate President Perdue: Senator Webster, we have already had that discussion. My ruling has been challenged.

Senator Webster: On objection to third reading?

Senate President Perdue: On the whole suspension of....

Senator Webster: On all of the rules? We are ignoring all of the rules. Thank you.

Senate President Perdue: No sir, the rules were abbreviated in second and third readings and putting it straight on the calendar. We did that a week ago, Tuesday. We just had House Bill 577. There was no question about the objection to third reading on it. Senator Webster, I'm trying to do all that I can do to make the process smooth and fair. So you have the floor to debate the bill.

Senator Webster: Thank you, mam. This bill... In the first case, for the record, I don't know where the notices were sent. I don't know what calls were made. I will tell you...tell everybody...that this Senator did not receive a call about this. I called in here yesterday and that was when I was told that there would be a meeting that would be more than a play like meeting today at 11:00 a.m. I found out yesterday afternoon, Senator Basnight. Now...I have mail that comes to about three or four different locations at different times...sometimes...and we are lucky that we get our mail...this week...next week...sometimes. But that's OK. I made it...most of us did. But the issue is House Bill 1023...for the lottery for North Carolina...suppose to bring salvation to education for North Carolina. In 1953 legalized liquor was supposed to bring salvation for education to Caswell County. And we voted in liquor stores in Caswell County. And we sold brown liquor, under seal to all of our neighbors. We built liquor stores all around the parameter to the County and sold to Pittsylvania County, Virginia, Rockingham County, Person County, Orange County....Durham County...No Durham had it. It was one of the few that had it. But we were...everybody had it but us. But we...we cut into the bootleggers business very sharply. And we built some schools. But we became dependant upon that money and forgot that someday that money wouldn't be there. Alamance...never did...by the way, never did adopt an ABC Board, but now the Caswell County ABC Board barely makes enough money to sustain it's own...to pay it's own employees. We can't generate enough money in Alamance County hardly to...certainly not to build any new schools. In the mean time, they was spoiled. They quit cleaning out the gutters and repairing the roofs. And it's not working people. I hope that we won't become dependant upon a lottery forever to build schools. And if it is such a salvation...by the way...my familiarity with a lottery goes back further than any of you. It goes back to about 1962 in South America. And I would challenge anybody to go to any of these nations that have had the lottery for fifty and a hundred years and show me that any nation that has had it for all that time is socially or economically any better off for having had it. If it is so good for education, those children down in Mexico who are selling Chiclets ought to all have PHDs. Because Mexico has had the lottery for fifty years. They don't even have....if it weren't for the Catholic Church, they wouldn't have any school at all, I don't think. Now...somebody feels that the only way that we can get it passed is by ignoring the rules that we operate under here. And that is a shame...that is a shame...that apparently the same thing happened over in the House when it was passed under strenuous objections...when it was hammered out of the House...ignoring the objections to third reading. And now what is happening here....after we left here...having been told that we were done and we were going home. This is...I guess we know how it's coming down. We may as well just suspend all the rest of these rules and this Constitution in the same process and move ahead with this lottery

Senate President Perdue: Further discussion or debate.

Senator Jim Jacumin (R-Burke): Madame President...Madame President

Senate President Perdue: Senator Jacumin for what purpose do you rise?

Senator Jacumin: Madame President, may I speak to the bill, please?

Senate President Perdue: The Senator has the floor.

Senator Jacumin: Folks, there is one thing about this for sure is that poor people are going to bear the brunt of it. Whether we accept it or not, we have a responsibility to the poor. The lottery is nothing else but a tax break for the rich. Exploiting the poor who least can afford it. If we've got to have more money for schools...those of us who are able to pay more money should be paying the bill, not the poor. Gambling in the State, as best I can determine, is illegal for an individual. But we're saying it's OK for our government. Folks there is something wrong with this picture. If you do a little ratio in proportion to the numbers and you will determine that the lottery is the most inefficient tax that there is. In this case, it cost mainly the poor, running a $1.94 to raise $1.00 of lottery tax. Research, as best we can tell from all of the States that have a lottery show that about 10% of those who play become compulsive gamblers. This means that we are making about 150—200,000 of our citizens compulsive gamblers. If we break this down to an average size County, in this average size County the lottery will break will break up 660 families with divorce. In this average size County the lottery will cause some 1200 to lose or quit their jobs. In an average size County the lottery will cause some 1900 to contemplate suicide. In this same average size County the lottery will cause more than 1300 to steal to pay for their gambling habits. None of these are good things. Gambling is teaching our children and adults the wrong way to get ahead. Here I would like to thank each of you for helping us in a Page project that we had this year in the Senate. Many of those young people gained an awful lot and each of our Senators that spoke to them gained a lot. But I had a chance to talk to a lot of those Pages in that process. Folks, all of them are against this lottery. All our young people are against this lottery. Senators, if God can't bless it. We shouldn't be doing it. For the wholesome future of our State, our families, and especially for our children, please vote "no" on this bill. There's a better way to do this. You'll never have to look back and wonder if you did the right thing or not. Thank you. God bless you.

Senate President Perdue: Further discussion or debate

Senator W. Edward Goodall (R-Mecklinburg): Madame President

Senate President Perdue: Senator Goodall for what purpose do you rise?

Senator Goodall: To briefly debate the bill.

Senate President Perdue: The Senator has the floor.

Senator Goodall: I just wanted to point out two issues...a lot of these other issue have been debated and I want go into to those. But two issues that haven't been discussed are the federal income tax consequences of the bill. One of the most common arguments recently has been the money going out of North Carolina. I think people have estimated $300 million played in the surrounding States. But if we get 150 million of that back in lottery winnings, which is average, then that would be a net of $150 million leaving the State. With a lottery....a $1.2 billion lottery in $600 million dollars in winnings, the Federal Income tax take on that might be $200 million. So I would argue that the money leaving the State may be more with a lottery than without. The second issue I would like to point out is that the North Carolina State Treasury will benefit from the $600 million in winnings, if our top tax bracket of 8.25% is applied to the $600 million, our State will be receiving $50 million. I would also suggest that if this is a true education lottery that we think now about the next session and we dedicate that $50 million to teachers to pay them possibly a stiffen for their expenses...do that in way that would be tax free basically...and remember that the State will have a windfall when this is fully implemented. That is not to suggest that I am for the lottery. I am voting against the lottery, but I wanted to point out two areas out that I think are significant. Thank you.

Senate President Perdue: Further discussion or debate

Senator Neal Hunt (R-Wake): Madame President

Senate President Perdue: Senator Hunt for what purpose do you rise?

Senator Hunt: To ask Senator Rand a question/

Senate President Perdue: Will the Senator yield?

Senator Rand: Of course.

Senator Hunt: Senator Rand, I haven't had a chance to thoroughly review this bill. But let me ask you a question. Is there anything that would prohibit lottery funds from replacing existing education funding?

Senator Rand: Well...the legislature appropriates it...the State's revenue, you know. We've all heard about the famed "lock box." I'm not aware of any "lock box."

Senate President Perdue: Further discussion and debate.

Senator Hunt: Madame President...Madame President

Senate President Perdue: Senator Hunt for what purpose do you rise?

Senator Hunt: To speak to the bill.

Senate President Perdue: Senator has the floor to debate the bill.

Senator Hunt: Ladies and gentlemen of the Senate, I'm opposed to the lottery also, but I think a lot of ya'll think this is a great source of revenue for education. But you just heard this money does not necessarily give us new money for education. It could supplant existing funding. There is nothing in the bill that prohibits that. In fact, I understand that it was originally in the bill and was taken out. But even if we did put it back in the bill, the next legislature could change it. We could just be raising additional money...not going...no additional money going for education and I think it's an error. I think... there is...obviously there is social differences and social reasons to be opposed to this. But if you think it's a good source of education, I disagree and I urge you to vote against it. Thank you.

Senate President Perdue: Further discussion and debate.

Senator Robert Pittenger (R-Mecklinburg): Madame President

Senate President Perdue: Senator Pittenger for what purpose do you rise?

Senator Pittneger: To debate the bill.

Senate President Perdue: The Senator has the floor.

Senator Pittenger: Thank you very much. Ladies and gentlemen of the Senate, General Assembly Fiscal Research Department tells us that by the year 2010 that our deficit will be $2 billion. Those aren't new figures. Most of us are already aware of that.

But the lottery is then...becomes a source of new revenue. Not necessarily for education, as Senator Hunt said there is nothing in the bill that stipulates that...This money

will be used no more for education than perhaps...the Highway Trust Fund set up, where we took $252 million from that fund this year. We took $50 million from the Medicaid Fund...35 million from another fund. So I would commit to you this isn't good public policy. It's not good fiscal management. It's frankly not good honesty to the good people of North Carolina. Yes, I would compliment the gaming people...and I'd compliment those in leadership that they have properly convinced...or adequately convinced the voters of this State that this is an education lottery. But shame on us. This is no more for education. This is just for the filling a hole because we haven't been willing to take a look seriously in running this State more efficiently and restructuring our State much like what other States are doing. So, I will be voting against this bill and hope that at some point the good people of this State will learn the facts and the real figures of what happens with this money.

Senate President Perdue: Further discussion and debate.

Senator Berger: Madame President

Senate President Perdue: Senator Berger for what purpose do you rise?

Senator Berger: To speak to the bill, please.

Senate President Perdue: The Senator has the floor.

Senator Berger: Thank you, Madame President. Well...members of the Senate....we got it...gambling fever. That's what this is. This is all about gambling and everybody knows that. And we've got it pretty bad because we're being told everybody wants this. This is what we need to do. By golly, I'll vote for this because it's what we need to do. That's what happens when people get a fever. They act irrationally. They act in way if they had an opportunity or used their God-given talents and thought something through — a way they wouldn't act. Let me give you a few facts about lotteries. First of all, if you bought 50 tickets a week...if you bought 50 $1.00 lotto tickets a week, you'd figure that you'd have a good chance of winning. And there would be a lot of people who would spend $50 a week to do that. Well guess what....the odds are that you're going to win once every 6, 923 years. So if you want to win the first lottery of North Carolina, you should have started buying your tickets around 5000 B.C.. Now...you know that's a fact. And if that's the sort of thing that we want to sale our people on, then we need to be upfront with them. Let's look at another fact. If you were to spend $25 on a lottery ticket every week for 20 years, you would have spent $26,000. Now you would think that after spending $26,000 you'd probably be in good shape in terms of the lottery. Well, you'd be $13,000 in the hole after doing that. So, you know, there is no way to characterize this except as a tax. A tax is something that takes money from the people and gives it to government and whether the contribution is voluntary or forced, it's a tax.

Now...we're being told this is an education lottery...Well, every place that the lottery has been sold to the people, it's been sold as an education lottery. I submit to you that the education part of the lottery will come ten years from now when what we see is that the money that was supposed to go for education has been used for other things. Statistics show that in other States when they institute a lottery the percentage of the General Fund that goes to education does not change significantly. There is no more money for education with a lottery. There is more money for government...more money for government to spend on other things...but the money going to education is not going to increase. But we've got lottery fever...we've got gambling fever...those facts and those statistics really don't mean anything. So I submit to you that the lottery at this point is a diversion. It's a diversion from our ranking as far as our public schools are concerned. It's a diversion from all sorts of other things...And at this point we've got all these people from the press here...everybody in the State is looking in on what we are doing and we have really diverted their attention. So in one respect getting this off the table will be a good thing. Maybe we'll start concentrating on those things that will improve the lives of our people...Maybe we'll start concentrating on improving our schools...Maybe we won't have the excuse that we can't do that because we don't have a lottery. That's what it's been. It's been an excuse. So that diversion will be gone and I hope the people call us to account on that. And I submit to you that when we come back here ten years from now, I challenge the members of this body to look at the percentages of the General Fund that are going to education...add the lottery in ten years from now...and you'll see that we are not going to be spending any more than we are right now....not a bit more. So, we've got the fever...we're going to go ahead and pass this. I ask you to vote against it. I ask you not to do this to North Carolina. You know, we all love North Carolina and I can live in North Carolina if we've got a lottery. I'd rather live in North Carolina without one and I ask you to vote against the bill.

Senate President Perdue: Further discussion and debate.

Senator Hamilton Horton: Madame President.

Senate President Perdue: Senator Horton for what purpose do you rise?

Senator Horton: To debate the bill.

Senate President Perdue: The Senator has the floor.

Senator Horton: Thank you, Madame President. I suspect that there is no one in this chamber who is really ecstatic over the idea of sending a lottery to our people. They're doing it, if we do it, because we want more money. That's the bottom line, isn't it? A lot of people in this chamber would much rather get that money some other way. And I would too because, you know, the aim of government is to nurture and protect its citizens not to fleece them. And a lottery is nothing but the fleecing of your own people. It's hard to justify it. You know, I frankly, am one of those that who doesn't object to gambling as such. I'd love to take a flutter on a horse race in North Carolina. I've done a little bit of gambling in other ways. Only difference is, of course, in North Carolina, we consider it illegal for you and me to gamble and immoral. In fact, three pages of this bill...three pages are devoted to making exceptions. We've got laws on our books and every one of them we have a little provision, if this bill passes, this won't be considered illegal. If you and I were to try and do the same thing, we'd be spending time in the poky. But the State can do it. The State can do what it condemns you and me doing ourselves. The worst aspects of a lottery is this fleecing of our citizens. Let me give you some idea... you know in every gambling there is a percentage that the house takes, if you will. For a person who spends a lot of time in horse racing, he will eventually get back 81% of what he gambles. For a person who likes Roulette, he's got a better chance. He gets back about 95% of every dollar he puts over a long period of time...get's it back from Roulette. Black Jack 80%. The Lottery? — 14%. In other words, even compared to Roulette and Black Jack and Horse Racing, the lottery is a bad deal. The question is: Is this what we want to give the citizens of our State? Do we want to be remembered by coming generations for knowingly cheating our own citizens in this way? Thank you, Madame.

Senate President Perdue: Further discussion or debate.

Senator Fred Smith (R-Johnston): Madame President

Senate President Perdue: Senator Smith for what purpose do you rise?

Senator Smith: To address the bill.

Senate President Perdue: The Senator has the floor to debate the bill.

Senator Smith: Fellow Senators who are here today to talk about the lottery bill. There are two issues here. The first issue is the procedure of how we got here. The second issue is the lottery itself. We were told last week that we were going to adjourn and we were not coming back. With reliance upon that, one member of our caucus went on his honeymoon. Whether he knows we're doing this or not today, I don't know. Another member of our caucus lies sick at home. As for me, my body is here, but my heart is in Philadelphia, where my wife lays in a hospital bed after two knee replacements yesterday. And I had to get a plane to get here for tonight...for today. I ask my colleagues on the other side of the isle: Does the end justify the means? How is that we said that we are not going to be here. Yet we are here. Is the almighty dollar that important? Is gambling money that goes into political campaigns that important? Is maintaining power that important? — that we would prostitute this process so badly. But nevertheless, we are here. And people talk about the lottery...and as I have studied the lottery...there are three basic arguments against the lottery. You can pick any one or you can pick all of them. The first basic argument against the lottery is it's moral aspects. Some people believe that it is morally wrong for the government to be in the gambling business...and for the government to be dependant on an immoral activity to perform it's function. Some people believe that its wrong for the government to teach our children that when tough issues come along that our moral compass is so out of whack that we will make expedient decisions. You know government should be about proper values and teaching our citizens proper values rather than teaching them to gamble. In our schools we teach character education...we teach our children to be responsible...we teach our children to have self-discipline, but we see that we in government cannot do that and have to resort to immoral activities to perform a function that we should be performing. So that's the moral aspects of the lottery. Let's move to the social justice aspects of the lottery. Some people oppose the lottery because they believe in social justice. They believe it's a scheme that preys upon the poor and the hopeless. You know, a Duke study shows that those in the lowest economic strata spend three times more of their income than the higher economic bracket. It clearly is a tax on the poor. Not only that, but we know that 5% of the people who play the lottery will become addicted, which will result in crime, child abuse, and domestic violence. What's the real cost on a family in North Carolina, if we're going to have a billion dollar lottery? Some people think it's a dollar here and a dollar there. But if we're going to have a billion dollar lottery, we have three million families in this State. Half of the families will not play the lottery. That means the other half...the 1.5 million families... will invest out of their family budget seven hundred dollars. I want to repeat that...seven hundred dollars per year will go to play the lottery. You know, I was doing some research and I found an article by someone I really respect who sits in this Senate and this is what he said. Maybe he'll remember these words. "The lottery is built on the backs of the poor. It exploits the people who can least afford it to benefit others who are better off. I can promise you that if North Carolina approves a state-wide lottery, food will be taken off the plates of children across the State. This happens now with those who abuse drugs and alcohol. Let's not compound the problem by adding another temptation for the weak and impoverished to have to fight." I think those words were true in the past and I believe they are true today. Well, let me read you a letter I got from a constituent — from Miss Lewis Fisher. It says, "How many innocent children will go to bed hungry if you vote for the lottery? How many will fear they will have no place to live? I know because I did. I grew up in a family of 13 with a partially disable father. We had very little. My father became an addicted gambler. He thought gambling was a way to help us, but it only made everything worse. I can still see my mother sitting at the sewing machine, but crying because we had...we were about to lose our house. It is a painful memory. I grew to hate my father and it was years before I could forgive him. A vote for the lottery means that innocent children and families will pay dearly in physical and emotional pain. The State and society will pay as well with the increased welfare rolls and the possibility of an increase in crime. It also sends a wrong message that you can get something for nothing. The real cost of the lottery far outweighs the perceived benefits. Remember that ill-gained money brings no good. Please vote against a state lottery." You know, a wise man once said: "Happy are those who hunger and thirst for righteousness. For they will be satisfied." Righteousness is a fight for social justice. Righteousness is when we do what's best for those who are down trodden. We need to be passing public policy in this State that's righteous — that helps those who need help. We don't need to be taking advantage of other citizens. And then, we get the third argument for those who oppose the lottery. And I call that the good government argument. That's because the lottery is an extremely inefficient tax on our citizens. It is a bad, bad deal for the State of North Carolina. We're going to take a billion dollars out of our economy, roughly two-thirds or 65% will go to the gambling industry and for prizes. That leaves 35% for the State. But then we have to figure in the sales tax that didn't get paid on that billion dollars. That's another seventy million dollars. And then we haven't paid for the social cost that we talked about of those 5% who will become addicted to the lottery...just as people become addicted to drugs. So at the end of the day, the State of North Carolina will get 20 to 25 cents on the dollar. You know, the State of Virginia, which has a very mature lottery uses all the advertising and all the games...only gets $300 million today from the lottery. So that's all we're going to get. You know, the public school debt in this State is 5.7 billion dollars. So if we put half of the proceeds, what we're talking about is less than 2% of the money that we need to build schools can possibly come from the lottery. My fellow Senators there is a better way and we haven't approached the better way. The better way is for the State of North Carolina to assume the responsibility to pay for Medicaid. If we would just as a State assume the responsibility to pay for Medicaid, then the money left to the schools and especially to our poor low wealth Counties would fund our education and we wouldn't have a Leandro problem and would build the schools that are necessary. That's the answer. But we don't do that. What we continue to do is to try and find more money and more money for our State budget. So that we can fund $150 million in pork barrel spending. You know, education is the most important thing other than public safety that our State government does. We spend 55% of our budget on education. And ultimately, passing this lottery will hurt the educational funding of our children. As my colleagues have stated other Sates have seen money moved from education funding to other places as people and States depend upon the lottery. Just as we have done with trust funds in the past, we pass them and we say they are for this use and we need the money and it goes somewhere else. That's what will happen here. Let me quote a person who we honored in this chamber and who is one of the bright stars in this State — President Emeritus Bill Friday. He's right on so many issues. I wonder why he could be so wrong on his position on the lottery. President Friday puts it this way: "I do not want to see my State which has done so much for so many...always manifest strong positive leadership now to say to it's young people: 'Yes, we're going to provide the best educational opportunity

Possible, but we're going to resort to gambling to find the dollars to do that." So my fellow Senators I would urge you today to vote against this bill. You know, we just passed a budget that has a $150 million in pork. The budget that we just passed, if you got to the end of it had a $534 million surplus. If we needed a lottery how did we end up with a $534 million surplus. You know, at the end of the day, I believe that what we do here is to do what's right for our citizens — to seek and stand for the good of society — to uphold and promote that which is best. I realize that Senator Hoyle said in the paper today that this is a bad, bad issue, but those Republicans who oppose the lottery will somehow have to pay for it. As for me, I'm prepared to pay that price. Because as Grantlin Rice said: "It's not whether you win or lose, but how you play the game that counts." We need to be doing what's good because as the prophet Micah said: " He has shown you, O man, what is good. And what does the Lord require of you, but to act justly, to love mercy and to walk humbly with your God." I don't know what you're going to do at the end of the day. But I tell you what I'm going to do. If this lottery passes, with the procedure that we've gone through, and with the harm that I think this is going to do on many of our citizens. I'm going to go home tonight. I'm going to take a good bath and I'm going to use a lot of soap.

Senate President Perdue: Further discussion and debate.

Senator Charlie Dannelly (D- Mecklinburg): Madame President

Senate President Perdue: Senator Dannelly for what purpose do you rise?

Senator Dannelly: To speak on the bill.

Senate President Perdue: Senator has the floor.

Senator Dannelly: Thank you, Madame President. Ladies and gentlemen of the Senate. When House Bill 1023 landed on my desk, one thing I knew, everyone in this chamber, who has a vote, knows exactly how he or she will vote. So nothing I say will change a person's mind. I do want to try to put some things in perspective, if I can. I read in the papers this morning where one Senator who is not here got some 50 plus calls from different people about whether he would be here and wherefore what he was going to do. In this day of high technology, I question anybody sneaking anything like this lottery bill over on any elected official. Because we do believe in trying to keep abreast of what's happening in Raleigh. We've heard the term "poor people" many times today in this chamber. For the general public, let me give you a little clue. The word "poor" is a political code word for "black." So I'll say it again, the word "poor" is a political code word for "black." And we are going to hurt black people, we're going to hurt poor people. Let me say this, if you want to help poor people more than the lottery deal, start thinking of the fact that the only reason that poor people still exist in this day to today and in this country is because they are shrewd by spending their pennies. Were they not, they would not be able to survive on minimum wage in this country. So if you want to do the right thing, pay poor people a living wage. Upwards of $10.00 an hour, and then we will show our concern for poor people. But when we talk about raising the minimum wage, then ohhh that's going to hurt the wealthy and the near wealthy — the small business man who is making money off the poor peoples who are making minimum wage and less. We call it gambling. We gamble in one way or form everyday. We go to stores that give sales. You save this — you save that. How can you save anything when the man is still making profit? — below cost of sales. That's a form of gambling in that you don't know that it's below costs. You see, they don't talk about the gambling — except what one Senator implied about it — You don't talk about gambling when those who are wealthy enough go to horse races — tour Las Vegas — play high stakes. Las Vegas is one and the same — Biloxi, Mississippi. And of course we go out on the golf course — those of us that can afford it — and we take little wagers on the golf course. But that's not gambling — that's just having fun because you have the money to do it. And poor folks can't have that fun. And of course, the American standard — none gambling games. Now we've been doing for decades "bingo." What is that? And it's my understanding at churches — even hold "bingo nights." I say to you, ladies and gentleman, I just wanted to set the record straight as to how we are helping poor people. I'm not playing politics, I'm just trying to set the record straight. Thank you.

Senate President Perdue: Further discussion and debate.

Senator Harris Blake (R-Moore): Madame President

Senate President Perdue: Senator Blake for what purpose do you rise?

Senator Blake: To speak on the bill.

Senate President Perdue: The Senator has the floor to debate the bill.

Senator Blake: This debate this afternoon — whatever I might say certainly will have no affect on the outcome of the vote. But I want to share with you that three years ago that I was asked the question: Are you for the lottery? My answer was that I was against the lottery because I did not believe that the state of North Carolina ought to be in the gambling business. We hear a lot about the polls that suggest that 70% of the people support the lottery. I just want to remind you that I was elected. I stated my case. The thing that bothers me today probably more than the lottery is the way in which we have arrived at this place today. I left here last Wednesday morning at about 6:30 or something like that...And I was told by our leaders that the business of this session was coming to a close. That being said, one of our members on the back row decided to take a delayed honeymoon trip, probably out of the country — could not be reached to bring him up to date on what's going on. Another one of our members got sick last Tuesday evening and today he's home sick. And I understand that some of the leadership has been in touch with that gentlemen to encourage him to do certain things that would allow this vote to be taken today. Mr. President, Senator Basnight, if you did this...based on getting this done...from my Christian background...I say God bless and this burden will be on you, not me. I urge my colleagues to vote against this bill. Thank you very much.

Senator Forrester: Madame President

Senate President Perdue: Members of the Senate, I would urge you to read your rules about calling out names of Senators or people on this floor. Yes sir, Senator Forrester for what purpose do you rise?

Senator Forrester: Madame President — To briefly discuss the bill before us.

Senate President Perdue: The Senator has the floor to debate the bill.

Senator Forrester: I'm not going into any long discussion on this. But for the record, I would like to object to third reading on this bill on a constitutional basis and a constitutional grounds that I brought up earlier — Article 2 — Section 23. I think if the Senate had passed the bill like this over to the House, with voting second and third readings on the same day, were related to the constitution, and not having a recorded vote on third reading that they would reject it. And I would like to object to the third reading on a constitutional basis. Thank you.

Senate President Perdue: Further discussion and debate.

Senator Vernon Malone (D-Wake): Madame President

Senate President Perdue: Senator Malone for what purpose do you rise?

Senator Malone: The opportunity to speak briefly on this proposed legislation.

Senate President Perdue: The Senator has the floor.

Senator Malone: Thank you, Madame President. Ladies and gentlemen of the Senate, there are poor among us and there always will be. And to use the word I have heard here this evening — or this afternoon — "shame" is appropriate. I think it's shameful that we have people who work for the State of North Carolina — many in this building — who rush away from here at 5:00 in the afternoon to go to restaurants and bars to be there to serve you when you and your family has come out for an evening of fun. I think that's shameful. I agree with you that is shameful. I think it's shameful that we only put a measly 2% salary increase in our budget this year with a little — some little other stuff tacked on — as a salary increase for these poor people that we are so interested in. And some of us didn't even vote to give them that 2% — you voted and you didn't even vote for that. That's shameful. I think it's...I think...I think we are fleecing the poor people — that's another word we heard here today — when we expect them to give us a full day's work, but not a full day's pay. We're fleecing them. And it is indeed shameful. Many of us came here from circumstances where we had the opportunity to do something good for poor folk before you got here. You sat on boards and on commissions as I did. And I'm guilty. We didn't pay folk in Wake County very much. And my city government is not paying them very much. We take care of the people at the top. So if you were truly interested in protecting and doing something for poor folk, I could have done it while I was County Commissioner. See. We'd a paid them more. And the rest of you who sat on various kinds of boards could have paid them more. I think the rules have been suspended...we use the word "sneak in stuff"....maybe we could sneak in a resolution here today and send it to the United States Conference and to the President of the United States and deal with the issue that Senator Horton talked about — these exorbitant interest rates that we expect people to pay. See, some of you all, can go to Sears this afternoon and write a check for $2000 and have refrigerator sent to your house. The folk who work for the State of North Carolina, they got to buy it on what we call, where I grew up, on time. And the refrigerator will be worn out before they get it paid for. Because if they pay a $100 a month on it, $11 will go on the refrigerator and Mr. Sears will take the rest of it. It's shameful. If you don't like the lottery, don't vote for it, but don't dump on poor folk.

Senate President Perdue: Further discussion or debate.

Senator Doug Berger (D-Franklin): Madame President

Senate President Perdue: Senator Berger for what purpose do you rise?

Senator D. Berger: To speak on the bill.

Senate President Perdue: The Senator has the floor.

Senator D. Berger: You know, outside of the beltway this is a pretty straight forward issue. Most people support the lottery and they don't understand what the thinking is inside the beltway. I know, just Friday night, I was sitting at a football game and kids would come up to me to sale me tickets raising money for the school and they would sale the tickets and half the money would go to the school and half the money would go to the winner. Every year my community sales 300 tickets in a reverse raffle with the last ticket being selected, the person wins a vehicle. The proceeds go for recreational activities in my community. So the people don't have a problem with the lottery. But we've gotten the mindset in this country that the popular will doesn't matter. In 1998, we saw the opposition party try to remove a