- JACKPOT: Lt. Gov. Halter gambles on state lottery and wins.
Until Nov. 4, Bill Halter was the politician who had made his way to a second-tier political office with a shoeshine and a resume. Now the lieutenant governor is the man who at long last gave Arkansas a lottery.
Lots of people prefer the first incarnation, but the lottery proved to be so popular with voters that it lends an expedient dimension to Halter's wonkish curriculum vitae. He risked what no other major politician dared to do and won. For that achievement, of ends that may be good or bad, Halter is the Arkansas Times' Arkansan of the Year for 2008.
You can make a case that if taking on entrenched opposition and starting a big new government program is the measure, the distinction would better go to Sheffield Nelson, the former gas magnate who forced the governor and the legislature last spring to enact the first real severance tax on natural gas, which ultimately may bring the government as much revenue as the lottery and in a far more progressive way.
But Halter's lottery will change Arkansas in more profound ways than the mere production of another $50 million to $120 million for a popular public benefit — college scholarships in this instance rather than highways, which will be the primary beneficiary of the new severance tax that the state begins collecting this month.
By year's end probably, Arkansas will be more deeply immersed in the gambling mania that has swept the country and specifically the South. Only seven states, two in the South, have not set up lotteries to pay for some government services. Although lottery backers say otherwise, the receipts will come heavily from people with low incomes. If the lottery produces the $100 million or $120 million that Halter and other lottery backers claim, it will be because Arkansas has a higher proportion of people with very low wages than all but a half-dozen states.
The other side of the coin is that college may become accessible to every single person who would like to go and whose high school work suggests that he or she is even remotely a prospect for successful college study. Last year, the state and the public colleges and universities (figures for private schools were not handy) awarded 24,253 scholarships worth $117.7 million, and some $52 million of state scholarship aid has gone begging because students did not apply for it or could not meet the criteria. For the big program, that is a grade-point average of 2.75 — a B- — and an ACT score of only 19. The constitutional amendment authorizing a lottery specifies that the state and the institutions must continue at least that level of student aid because the lottery is supposed to supplement the state effort, not supplant it.
Finally, Halter's sponsorship of the lottery and his energetic campaigning for it seem to have propelled his career, at least momentarily. He has been something of a pariah in the Democratic Party despite or perhaps because of his easy triumph in his first race for office two years ago. It makes him a player for higher office, the seat of U. S. Sen. Blanche Lincoln in 2010 perhaps or governor in 2014, assuming he does not challenge Governor Beebe in 2012, which looks now like a reckless gamble.
For a while in 2005 and 2006 Halter campaigned for governor when the untested Mike Beebe was making his first race but then he backed away and ran instead for lieutenant governor on the promise of instituting a lottery. The legislature, even the chamber over which he presided, refused to refer to the voters a constitutional amendment authorizing a lottery so he organized a petition campaign to do it.
Nearly 63 percent of the voters favored the amendment, and if the experience of other states is any measure the lottery's popularity will grow once people are buying Powerball and scratch tickets and kids are getting scholarships.
The lottery may not advance Halter's vaulting ambitions because Southern politicians have ridden to office on the promise of a lottery but they have not always secured their reputations after having delivered it. In the last decade, Democrats upset Republican governors in South Carolina and Alabama by promising a lottery but were swamped in the next election.
No one could have been surprised that voters ratified the lottery amendment, though perhaps by the wide margin of the victory, because polls have consistently shown that most Arkansans thought that a lottery would be a good thing if it supported an educational goal. But getting the question to the voters has been problematical during the 20 years since lottery mania washed into the Bible Belt. The legislature consistently refused to refer a lottery amendment to the voters, and initiative campaigns always failed either because the petition campaigns faltered, the Supreme Court struck the proposals from the ballot for procedural shortcomings or the lottery was tied to other gambling propositions that repulsed voters.
While polls showed that most people would accept or even cheer a lottery, an odd consortium of opponents — church groups that considered gambling a sin and liberals who thought the government ought not exploit the poor and the desperate for revenues — made it risky for political leaders to support. Halter alone among state political leaders openly supported the lottery. Beebe quietly revealed on election day that he had voted against it.
Halter may have had a better grasp of the political dynamics of the lottery. All across the Bible Belt the lottery has been the ticket for Democrats to regain statehouses from Republicans, who had captured power after the sweeping civil rights enactments by a Democratic president and Congress in the 1960s.
The modern lottery movement began with the adoption of a lottery in 1964 in New Hampshire, which was hamstrung by the absence of either a sales or income tax. Lotteries proliferated in the 1980s, maybe in response to the tax revolt articulated by Ronald Reagan and Proposition 13 in California, which fed the notion that lotteries could make taxation redundant. They got a further inducement from the enactment of federal legislation in 1988 immunizing state governments from truth-in-advertising restraints when they operate lotteries. But, except for Florida, the South remained resistant until 1987.
Wallace Wilkinson, a Lexington businessman who made a fortune from college bookstores, ran for governor of Kentucky that year and was buried in a pack of Democratic candidates until he hired a then-unknown New Orleans political consultant named James Carville. Carville told him that to distinguish himself from the better-known field that included two popular former governors he should advocate a lottery. Wilkinson gambled on it and won the Democratic nomination, then defeated the Republican by the biggest margin in Kentucky in the 20th century.
In 1990, Zell Miller, who had been the undistinguished lieutenant of Georgia for 16 years, hired Carville for a race for governor and Carville gave him the same advice. Miller promised an effort to legalize a lottery, saying that the state was losing millions of dollars because people were going across the Florida border to buy lottery tickets. That has been a refrain in every lottery campaign, including Arkansas's.
Governor Ray Mabus in Mississippi jumped on the idea the same year but it was defeated. The legislature opted instead to legalize riverboat casinos. Voters in 1992 narrowly defeated a constitutional amendment legalizing a lottery.
Two other longshot Democratic candidates, James H. Hodges in South Carolina and Don Siegelman in Alabama, embraced Carville's lottery strategy in 1998 and ousted Republican governors. Hodges got a lottery passed in South Carolina but Alabama voters defeated a lottery amendment, partly because by the election Siegelman was enmeshed in a federal corruption investigation masterminded by White House political adviser Karl Rove.
Halter says he was unaware of Carville's role in the lottery movement or the lottery's role in so many Southern political campaigns. It suggests that the lottery was a political artifice and he says he never thought of it in political terms.
“I tried to make clear that this was not about a lottery but about scholarships,” he said recently. “The lottery is just a funding mechanism. If we were already providing college scholarships I would not be passionate about a lottery.”
He also campaigned on universal pre-kindergarten education, which is a popular use of lottery proceeds in other states. “But, fortunately, Arkansas now has funded that,” he said. “It's done and we don't need the lottery for that.”
The lotteries in Georgia and South Carolina proved to be particularly bountiful for the states almost from the outset. Georgia last year netted $858 million for scholarships and preschool programs and South Carolina collected $266 million for scholarships and other education programs.
Georgia was so flush with lottery revenue that it lowered the required grade-point average, eliminated all income limits on scholarships and raised the limits on scholarship awards at private colleges. Pell Grant recipients now can get full state scholarships on top of their federal grants.
The lottery cemented Zell Miller's popularity and while Republicans first opposed it the lottery became politically sacrosanct.
Based on the financial experiences of Georgia, South Carolina and three other Southern states Halter calculated that the Arkansas lottery would net $120 million a year for scholarships. He rounded it down to $100 million “to be conservative,” he said.
Iowa and Kansas, the two states most comparable to Arkansas in population, had a different experience. After 20 years, those lotteries are finally producing from $60 million to $75 million a year.
Not a good comparison, Halter said.
“The only thing Arkansas has in common with Kansas is six letters in their names,” Halter said. Kansas and Iowa, he said, are outliers, not representative of the lottery states. Culturally and socially, Arkansas is more akin to the Deep South states.
One way it is akin is the quotient of people with low incomes. Only Mississippi has a higher percentage of families with incomes below 200 percent of the poverty line.
Halter disputes the idea that poor people are the biggest participants in lotteries, that African Americans are the likeliest customers or that the numbers of poor have anything to do with the size of the lottery bounty in any state.
A Gallup national survey shows that the people most likely to buy lottery tickets are those with high incomes, he said. But numerous studies have concluded that people with low incomes spend disproportionately on lottery tickets. The National Gambling Impact Study Commission found in 1997 that although people of all incomes bought tickets those with incomes under $10,000 spent on average almost three times as much as those with incomes over $50,000.
Whatever the income distribution, according to Halter, it is all overridden by the economic and social bonanza that universal college access will produce. Arkansas is dead last in the ratio of college graduates to population and Arkansas's low economic status bears a direct relationship to its low educational achievement, he said.
“There is no state anywhere that has a high income level and a low level of achievement in higher education. And there is no state with a low level of educational achievement that has a high per-capita income. There is no state with a high level of educational achievement and a low income. You know what a correlation coefficient is. It's almost linear in its relationship with prosperity.”
That is the central reason that he ran for public office when he returned to Arkansas and it is the best thing that a public official can do for his state, Halter said.
“Higher education is the path forward for Arkansas and any state that wants to achieve. I welcome all comers in that debate.”
If you look at where the Southern states are today and where they were in 1929, before the Great Depression, three states — Virginia, North Carolina and Georgia — have moved dramatically up the national ladder, he said. Each is defined by its commitment to education, particularly higher education.
He returns repeatedly to the Georgia experience with the HOPE scholarships created by the lottery, the template for his lottery drive.
The education-prosperity correlation is hard to dispute, but there are nevertheless some bothersome aspects of the Georgia experience. You would expect the near universal access to college afforded by the merit-based scholarships to raise college-entrance test scores, a good measure of achievement, but nearly two decades after the scholarship program began Georgia still ranks consistently at the bottom of the 50 states in the average SAT scores of its high school graduates.
Georgia also reinforces one of the arguments by foes of the lottery, that poor people who play the lottery will be paying to send the kids of affluent and middle-class families to college. One study concluded that only 4 percent of Georgia's HOPE scholarships went to youngsters who could not otherwise have gone to college. A study by one education journal ranked Georgia last among the 50 states in the likelihood that an economically disadvantaged student would be able to attend college.
That is a baffling statistic for a state that offers scholarships to an extraordinary share of high school graduates, unless it means that the poorest kids are still so unprepared that they cannot meet the minimal qualifications for aid.
It also raises the question of whether if the Arkansas lottery produces revenues in Georgia's and South Carolina's proportions, the state will have far more scholarship money than students need or can qualify for. After all, the appropriation for Academic Challenge Scholarships now yearly exceeds the demand for them so that the fund now has a reserve of $52 million. The amendment does not permit any of the lottery's net proceeds to be used for any other purpose.
The state has 19 scholarship programs, most of them reserved for a distinct group of students, like the children of law enforcement officers killed or permanently disabled in the line of duty, but two of them are large and general for all youngsters of academic merit. The state government spent $43.5 million on student aid last year. In addition, the 33 state-supported universities and technical and community colleges handed out $74.2 million in scholarships and other forms of student aid from their own unrestricted funds, topped, of course, by the University of Central Arkansas's $17.8 million.
Neither the state government nor those institutions may slack in their aid after the lottery goes into effect without violating the Constitution. At least that is Halter's interpretation of the amendment that he helped write.
But Halter does not believe there is even a remote chance that the state will wind up with more scholarship aid than there is need.
“I would love to have that problem,” he said. “I'd love to be thrown into that briar patch, but it won't happen.”
Scholarships are going begging now, Halter said, not because there aren't students who want and need them but because eligibility for the scholarships is baffling. Students, parents, teachers and counselors cannot tell you the criteria for even one of the 19 scholarships and that goes for the people at the Department of Higher Education, too, he said.
There needs to be a simple and popularly understood formula for qualifying for a merit scholarship such as the lottery will support, he said. He suggested that it simply be a 2.5 grade-point average. He is not sure he would require students to have completed the core curriculum required for an Academic Challenge grant or the other major merit scholarship, the Governor's Scholars program.
Lots of people think a GPA is not a reliable method, by itself, to measure a youngster's preparation for college work. The Department of Higher Education thinks it is too simplistic.
State Sen. Jim Argue of Little Rock, the outgoing chairman of the Senate Education Committee, is another skeptic.
“The GPA in Arkansas is a worthless measurement of anything,” he said. “It bears no relationship to the ability of kids to achieve at the college level. It's fool's gold.”
The lottery always seemed like an odd, plebeian issue for a politician with an unusually elegant resume, a background of academic and policy immersion.
When Halter returned to Arkansas in 2002 and encouraged bruiting that he would run for governor, his impressive vitae attracted a few serious supporters. But he did not run, state Treasurer Jimmie Lou Fisher did, and she came close to beating Gov. Mike Huckabee. Halter got ready to run in 2006.
William A. Halter Jr., who is 48, does have a fetching Arkansas story. Son of a North Little Rock businessman, he excelled at Little Rock's Catholic High School as an athlete and a scholar. He was the star running back of the Rockets under Coach George Loss, who would himself star in Halter's commercials when he was running for lieutenant governor in 2006 and also for the lottery campaign in 2008.
At Stanford University, where he earned a degree in economics and political science with honors and distinction, Halter was a Truman Scholar, a national recognition for college juniors who show exceptional leadership potential and who are committed to public-service careers. He attended Oxford University as a Rhodes Scholar and received a master of philosophy degree in economics. He was on Stanford's Board of Trustees for seven years and is a trustee emeritus.
Halter got into government work after college and was an economist for the Joint Economic Committee of Congress and chief economist for the Senate Finance Committee. He made a small fortune as a management consultant with McKinsey & Co. and as an adviser and director of biotechnology and information technology companies, which enabled him to largely bankroll his first campaign for office.
At the age of 31 Halter came back to Little Rock in 1992 as president of a new progressive think tank established by Walter Smiley, William H. Bowen and others. In a few months he announced that he was resigning to pursue other goals, but the word was that it was Smiley's initiative that he leave.
Halter had been an intern in the office of Gov. Bill Clinton and by the time he had parted ways with Smiley's and Bowen's policy research outfit Clinton was on his way to the White House. He worked in Clinton's presidential campaign and landed a succession of jobs in the administration. For six years he was with the Office of Management and Budget. Clinton insiders would say that he was never very popular at the White House except with the president, who in 1999 nominated him for deputy commissioner of Social Security, in effect the chief financial officer for the pension program. In Clinton's final weeks the Social Security commissioner departed and Halter became the acting commissioner.
Why he was not popular no one can say, except that in executive offices where arrogance was a culture Halter “just rubbed everyone the wrong way, just said the wrong things” to people, as one habitué of the White House put it.
Halter began running for governor in 2005 and he said a lottery would be part of his platform. Mike Beebe, the attorney general then, had not announced but it was commonly known that he would run and commonly assumed that he would win. Halter seemed to have consulted widely with friends that he had made and it is hard to find anyone who didn't tell him that it would be suicide to run against Beebe, whom the Democratic Party was eager to crown. Still, he went ahead until it seemed there was no turning back. But like Jim Guy Tucker 12 years earlier he did back down in the face of a fait accompli and ran for lieutenant governor.
It was not Beebe's presumed strength that changed his mind, Halter said recently, but the certitude that it would be a hard and expensive contest for both men, which would in the end only strengthen the Republican nominee, Asa Hutchinson, and heighten the prospect of another four years of Republican rule.
He got into the lieutenant governor's race 10 weeks before the primary, joining three Democratic legislators, Sen. Tim Wooldridge of Paragould, Rep. Mike Hathorn of Huntsville, who had been the Democratic nominee for Congress in the Third District two years earlier, and Rep. Jay Martin of North Little Rock, the Democratic leader of the House.
Laying out a platform of policy goals like he was running for governor, leading with a lottery for scholarships, Halter outspent the others easily, relying on money that he borrowed from himself. The commercials were very good. There was funny repartee between Halter and the widely loved George Loss, Halter in pads and cleats, Loss in coaching regalia.
Halter led the ticket easily and then beat Wooldridge in the runoff. Though he had received awards from several interest groups like the Arkansas Municipal League and the Hospital Association, Wooldridge had some flaky right-wing stances, like support for public hangings, that drove moderate Democrats to Halter. After the primary Wooldridge's campaign manager endorsed the right-wing Republican candidate, Sen. Jim Holt, saying that Halter was “a California liberal” whose values were poison in Arkansas.
How much the lottery had to do with Halter's victory is hard to say though it must have played a much smaller role than it did in the template gubernatorial races in Kentucky, Georgia, South Carolina and Alabama.
“In a race where none of the candidates had statewide names I think it did distinguish him from the pack,” said Dr. Jay Barth, professor of political science at Hendrix College. “It clearly was consequential, but in the end it was his superior financial resources and exceptional advertising that won.”
The lottery is an issue that crosses ideologies in interesting ways, Barth said. It appealed to an overwhelming majority of African Americans and at the same time to conservatives who want an alternative to taxes. The AFL-CIO and the Arkansas Farm Bureau, a political odd couple, both endorsed the lottery.
Having defeated three popular Democratic legislators in the primary and the flakier Senator Holt in the general election, Lieutenant Governor Halter went to the Senate to preside in 2007 singularly powerless. Hoping to get a lottery amendment referred by the legislature, he found virtually no help among his Senate colleagues and only a few in the House of Representatives. Rep. Will Bond of Jacksonville introduced the resolution in the House of Representatives but it got nowhere. Bond said Halter's support actually might have hurt the resolution in the joint committee that winnows constitutional proposals.
So, after the session, Halter organized a petition campaign to get it on the ballot, and this time he got some big-time financial support from John Bailey and his family, who are champions of college scholarships, the financier Warren Stephens and the Walton family.
What could account for Halter's poor rapport with legislators, particularly in the Senate where — standing, not sitting, on the dais, as one colleague noted scornfully — he presides each day?
Lieutenant governors have not carried much clout in the Senate since 1967, when the Senate stripped the office of most of the prerogatives because a Republican had assumed the office for the first time. Their influence depends almost entirely upon their personal charm, and that is not Bill Halter's strong suit.
The circumstances of his election did not help him. Almost every lawmaker in both houses had supported one or another of his opponents out of personal friendship, and Halter was a particularly presumptuous upstart. Bill Clinton was a Rhodes Scholar and an Ivy Leaguer who came home and started a political career at the top, but he was so agreeable and solicitous that everyone liked him and wanted to help him.
To hear his colleagues tell it, Halter just always seems to rub people the wrong way. “Someone else can tell a joke and everyone will get a kick out of it,” a Democratic lobbyist said. “Bill Halter can tell the same joke and people will be offended.”
It does not help to have run against Mike Beebe, even for only a while, and then to have tried to establish counterinfluence by announcing your own legislative program. There is still tension between the two politicians. Last month Halter laid out his objectives for the implementing lottery legislation and Beebe said he had different ideas. Halter hopes to have a hand in shaping the legislation being crafted in the House and Senate but his influence will be minimal.
It also does not help that he publicly toyed with the idea of running last year against U. S. Sen. Mark Pryor, who like his father in his last race in 1992, escaped without an opponent. Every major political power in the state looks at Halter warily, as an immediate aggravation or a future opponent.
That includes U. S. Sen. Blanche Lincoln, who is up for re-election next year, and Attorney General Dustin McDaniel and U. S. Rep. Mike Ross, who are expected to run for governor in 2014, when Beebe will have exhausted his allowable years in office.
His espousal of the lottery, alone of major officials, is not the only evidence of Halter's loneliness in the political sphere. He goes his own way on politically delicate subjects. While other statewide officeholders skirted Initiated Act 1, which outlaws adoption and foster parenting by gay, lesbian and unmarried couples, or else expressed muted opposition, Halter won the admiration of groups fighting the proposal. At a North Little Rock Democratic rally the week before the election, he skipped a lottery plea and said it was important that people defeat the foster-care and adoption proposition and spurn the bigotry behind it.
Halter insists that he has no grand design for higher office, either governor, the Senate or the presidency. Never had one, he said. Unlike Clinton he did not yearn at an early age to be president or even governor and plot a course to get there. He has merely taken advantage of the circumstances that life presented him. Obviously, he said, his lifetime ambition is not to be lieutenant governor of Arkansas, but there is no way to calculate what the circumstances will be in two, four or six years.
If Halter achieves a prime political office it will not be in the usual way of Clinton, David Pryor, Dale Bumpers, Mike Beebe, by the force of personality and the development of warm personal alliances. He may represent the end of the power of personalism in politics.
“He has shown that you can get pretty far by going to the people through good media,” Barth said. “He is awfully good on television but not so good with people one on one. That may be the future.”