Governor’s Choice to Run Lottery Says No, Cites Pay

Gov. George Deukmejian’s cautious attempt to launch the state lottery hit a significant snag this week when the man he picked to run the operation turned down the job at the last minute because the salary was too small, Deukmejian revealed Friday.

Rather than wait until a new lottery director can be recruited, a disappointed Deukmejian named the present chairman of the state Lottery Commission, businessman Howard Varner, as temporary director. Before taking the $100-a-day, part-time position as lottery commissioner in January, Varner had no lottery experience.

Deukmejian said that the naming of Varner would allow the lottery to move ahead without additional delay.

But the latest setback could add fuel to criticism that the governor’s go-slow approach has cost the state more than $1 million a day for public education.

Massachusetts Official

The governor said that he had chosen Thomas O’Heir, the 53-year-old assistant director of the Massachusetts State Lottery, for the $73,780-a-year position. As the No. 2 two executive for one of the most successful state lotteries in the country, O’Heir “fit the bill” for California, Deukmejian said.

But, as the extensive background check on O’Heir was nearing completion, the job candidate announced that “the minimum starting salary workable for Mr. O’Heir would be $100,000,” Deukmejian said.

The governor noted that raising the salary, which was set by the initiative, would require approval of the Legislature. He said that he would consider signing a bill to boost the pay for the director, but that he would no longer consider O’Heir for the position.

In a telephone interview, O’Heir expressed regret that he had waited until the last minute to complain about the salary, which is just $2,780 a year above his current pay,

“I guess the realization of living expenses out there . . . crept up on me,” O’Heir said. A house in California would cost more than twice what he could realize from the sale of his Massachusetts home, he said.

“I have a large family, with eight children, and my job is the principal source of my income. This is a big move for a family of this size . . . and it was the housing costs that bothered me.”

Deukmejian said that his staff would start another search for a permanent director. But he added that in the initial search not one of the directors of existing state lotteries applied for the post.

Under the initiative, the governor was required to name both the five lottery commissioners and the director within 30 days of the election. The measure also called for lottery sales to begin this week.

Careful Selections

But Deukmejian has insisted that it is more important to make careful selections than meet the initiative’s deadlines. The initiative imposes no penalty for failing to meet its target dates.

However, a San Jose area substitute schoolteacher has filed suit to force a lottery start-up. And some legislators, including Assembly Speaker Willie Brown (D-San Francisco), have accused the governor, who opposed the lottery initiative, of “foot-dragging.”

Deukmejian appointed the lottery commissioners on Jan. 29, close to two months after the deadline. And he decided to consult with his commission appointees before choosing an executive director.

Varner, 54, the interim lottery director, is the retired president of Host International Inc. of Santa Monica, a large restaurant chain.

Varner, who according to Deukmejian has said that a lottery start-up is likely to be four or five months away, could not be reached for comment Friday. The governor said that Varner would step down as a member of the commission while he holds the director’s job but would be reappointed to the commission when a permanent director is hired.

Temporary Director

Deukmejian appointed Chon Gutierrez, assistant director of the Department of Finance, as temporary deputy director of the lottery. A veteran civil servant, Gutierrez said Friday he has no interest in becoming the permanent head of the lottery operation.

In contrast to Deukmejian, Oregon Gov. Victor Atiyeh has moved quickly to get his state’s lottery going after that state’s voters approved a similar initiative in November.

The Oregon Lottery Commission is now awaiting the delivery of 40 million scratch-off, instant-winner lottery tickets, and expects to start sales by its April 25 deadline, said Oregon lottery spokesman T. L. Fuller.