Leadership Vacancies Immobilize Lottery

The Davis administration’s plodding pace in making major appointments has left leaders of California’s lottery paralyzed, unable to make any major decisions even though its sales are slumping severely.

For most state agencies, Gov. Gray Davis’ deliberateness has not created serious problems, because holdover appointees of his predecessor, Pete Wilson, are filling in until replacements are named.

But the lottery, the multibillion-dollar gambling operation that sends its profits to the state’s schools, is different. It has no director. No chief deputy director. And the Lottery Commission, which sets policy, can’t meet because it doesn’t have a quorum. With three vacancies, the five-member commission has only two sitting members. On the administrative side, the highest-ranking official is Fillmore P. Crank Jr., a deputy director from the Wilson administration.

The problems are heightened, legal experts say, by the state lottery act itself, which vests the power of administrative decision-making with the director and policymaking authority exclusively with the commission.

Robert Beverly, a former state senator from Long Beach whom Wilson appointed as Lottery Commission chairman, said the inability to act comes at a time when revenues for the first six months of the fiscal year are at least $100 million short of projections.

“I am concerned about it,” he said. “I wrote a letter to the governor asking him to appoint both an acting director and another member of the commission.”

Davis press secretary Michael Bustamante said his boss is moving as fast as he can to fill positions but doesn’t want to make appointments in haste.

“Like with all the other boards and commissions, the governor is looking at the best people that will represent him in the coming weeks,” Bustamante said.

Davis has more than 2,000 appointments to make, from key agency secretaries to members of obscure boards and commissions. So far he has filled all Cabinet-level positions and made some appointments to boards and commissions but has named only two department heads--the directors of the consumer affairs and transportation agencies.

The slow pace has affected the lottery more than most state agencies because of an unusual chain of events. In late October, the lottery’s director, William Popejoy, resigned and was replaced by the chief deputy director, Eugene Balonon. Wilson elected not to fill Balonon’s position.

Meanwhile, at the commission there was already one vacancy when Wilson decided to appoint another lottery commissioner, Arthur Danner, to a judgeship. A few days later the term of a third commissioner, Lisa Hughes, expired. Wilson quickly reappointed her to a new term.

But when Davis became governor, he announced that all Wilson appointments not yet confirmed by the state Senate would be withdrawn. Both Balonon and Hughes were out of their jobs.

At the time, they were preparing for the commission, which had not met since October, to meet in January; sluggish revenues were to be a prime topic.

When lottery sales dip, the commission often attempts to raise revenues by cutting administrative expenses or introducing new games. Under state law, at least 34% of lottery revenues must go to education.

The current state budget shows expected lottery sales of $2.6 billion, with $935 million for education. But in the first six months of the fiscal year, sales were only about $1.2 billion, a trend that will leave revenues $200 million short of the goal if it continues.

Norma Minas, a spokeswoman for the lottery, said it is not unusual for sales to slip when there are no big jackpots in the Super Lotto game. The last big jackpot was $70 million in July.

“Our business is based on luck and jackpot rollovers, and we haven’t had a lot of that lately,” she said. “People have been winning those $4-million jackpots on a regular basis.”

Even with the problems created at the lottery, the new governor draws support from an unexpected quarter. Assemblyman Tom McClintock, an outspoken conservative Republican from Northridge, said Davis shouldn’t be criticized for being deliberate in his appointments.

“I would never criticize a governor for taking the time he needs to make appointments he feel are the best to craft the government according to his design,” said McClintock. “My criticism is that there are far too many of them to make.”

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Lottery Sales

California Lottery sales have fluctuated in recent years. This year’s sales are falling $200 million short of projections.

Fiscal year: Total sales

1992-93: $1.76 billion

1993-94: $1.93 billion

1994-95: $2.17 billion

1995-96: $2.29 billion

1996-97: $2.06 billion

1997-98: $2.29 billion

1998-99: $1.2 billion*

* Unaudited revenue figures for the first six months of the fiscal year

Source: California Lottery