Gov. Arnold Schwarzenegger today defended his plans to borrow against future profits from the state lottery to help close a $15.2 billion budget deficit, arguing that the state’s fiscal crisis is so deep that cutting spending alone is not a viable option.
Under Schwarzenegger’s proposal, California would sell up to $15 billion in bonds to Wall Street investors over three years. The investors would be repaid with interest using profits generated by the state lottery, which would have to be revitalized to generate more revenue, said Mike Genest, secretary of Department of Finance.
In addition, lottery money spent on public education in the state would be capped at the current level of $1.2 billion, even if lottery revenues increase.
The plan would require voter approval because the state lottery was installed as a result of a 1984 ballot measure that promised to help fund education. If voters reject the idea, the governor proposes a temporary 1 percent increase in the sales tax, which would expire in 2011.
The Ugly American 
