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Pa. State Sen. Mike Stack Blasts Gov. Corbett's Privatization Plan Spending.

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Pennsylvania State Sen. Mike Stack (D-Phila.) – buttressed by a recent report from the Pennsylvania Auditor General – blasted Pennsylvania Governor Tom Corbett’s continued spending on fees associated with exploring privatization of the state’s lottery system.

Stack accused Corbett of spending nearly $5 million of taxpayer money on legal consultation on a plan that has drawn widespread criticism.

“This waste of taxpayer money has gone well beyond unwise and is now unconscionable,” Stack said via a statement released by his office. “Pennsylvania seniors have a reason to be worried that the governor continues to listen to outrageously paid consultants instead of the people who elected him.”

The Corbett Administration announced last October that the commonwealth and Camelot Global Services PA, LLC have mutually agreed to extend Camelot’s bid for the lottery private management agreement, originally set to expire Oct. 29, 2013, through the end of the calendar year.

The extension, according to Corbett’s office, will allow the commonwealth to pursue legislative efforts to address the continued need to grow reliable revenues for programs for older Pennsylvanians.

“Older Pennsylvanians deserve every effort of my administration and the legislature to make sure they have access to the programs upon which they rely,” Corbett said at the time. “It is our responsibility to ensure that the Lottery is positioned to grow in order to meet growing needs.”

“Today that need is outpacing our ability to pay for it. With the Legislature’s support, we can work together to set a path and plan for the future of services for older Pennsylvanians.”

Camelot’s priced bid proposes $34 billion and 20 years’ worth of Lottery profit growth, should a private management agreement for the Pennsylvania Lottery be executed. It is expected that that annual growth will generate $3 billion to $4.5 billion in new funding for senior programs over the 20-year contract term.

In April 2012, the commonwealth began the competitive procurement process to engage a private manager to run the Pennsylvania Lottery. In November, it announced Camelot as the selected vendor.

Corbett’s plan has the support of influential Pennsylvania Senate Majority Leader Dominic Pileggi (R-Chester/Delaware), who said privatizing the lottery would reap benefits for seniors.

“There are significant reasons to explore ways to grow the lottery and stabilize the Lottery Fund,” Pileggi said. “It is our duty to make sure our mothers, fathers, neighbors and friends have the services they need and that the commonwealth has the means to pay for them.”

While state Democrats have long decried Corbett’s drive for privatization, Stack was particularly incensed that Corbett is spending precious resourced on what appears to be a doomed plan.

Stack said a recent Pennsylvania Auditor General report showed the Corbett Administration approved in September an addendum to its contract with DLA Piper, the multi-national law firm that arranged Illinois’ failed lottery privatization. That addendum, costing the lottery another $889,000, puts taxpayers on the hook for a total of $4.5 million, or 11 percent of the lottery’s operating budget.

“Despite all that pay, the lawyers and consultants have yet to come up with a sound, or even legal, lottery privatization plan,” said Stack, Democratic chairman of the Pennsylvania State House Banking and Insurance Committee. “That’s because, under current management the lottery today works extremely well, and any claims to be able to improve performance without a massive expansion of gambling have to be viewed with skepticism.”

The costs incurred so far represent only part of Pennsylvania’s obligation to the consultants, Stack said. One consultant is due a “success fee” if the deal to hand the lottery over to a British company goes through. The amount of that fee hasn’t been estimated.

“Many months into the process and there are still numerous unanswered questions and unknown costs,” Stack said. “When the state’s fiscal watchdog can’t get that information, it raises even more questions. The administration needs to end this fiasco before it costs another dollar.”

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