Louisiana lawmakers should dedicate all of the tax proceeds from legal sports betting to early childhood education, a state commission recommends in a new report.

The Louisiana Early Childhood Care and Education Commission is urging the state to immediately invest $85.8 million in educating children from birth through age 3 and continue to increase spending annually by nearly that amount over 10 years for a total cost of $839 million. The commission made the same recommendation in a previous report.

Two state legislators, Rep. Stephanie Hilferty and Sen. Beth Mizell, co-chair the commission, which also includes representation from the executive branch of state government and leaders from the education, business and nonprofit sectors.

If the state were to invest the recommended initial $85.8 million in early care and education now, it would see an economic benefit of $1.8 billion over the next 10 years, the commission’s report said. If no investment is made, the state could see a compounded economic loss of $12.1 billion over the next 10 years, the commission said.

The federal American Rescue Plan Act dedicates to Louisiana almost $300 million in Child Care and Development Block Grants and more than $475 million for child care stabilization. Combined with previous stimulus grants, Louisiana will receive more than $1 billion to support child care and families, officials said.

The Louisiana Department of Education, however, has to spend all the money by Sept. 30, 2024. State Superintendent Cade Brumley said that while he embraces the short-term solution the stimulus money provides, “Louisiana should consider investment for long-term funding solutions.” 

“The flood of new federal funding from recent stimulus packages will provide Louisiana with an opportunity to address some of the immediate challenges raised by the commission,” said Mizell, R-Franklinton. “However, we know that the state must put together a plan now for how it will fund early care and education at the appropriate levels once the stimulus funding runs out.”

Among other measures, the commission recommended committing all revenue raised from sports betting to the Louisiana Early Childhood Education Fund. Voters in 55 of 64 parishes legalized sports betting in their areas last year.

The voter referendum didn’t specify how sports betting will operate in the state or what the tax rates or fees would be, leaving legislators to work out the details this year. It’s impossible to know how much money sports betting might raise in Louisiana, though a 2019 study might offer a clue.

Louisiana Economic Development hired Spectrum Gaming Group to perform a comprehensive analysis of the state’s gaming sector, which included sports betting revenue projections. Spectrum estimated Louisiana could generate between $237 million and $332 million annually, adding that legalizing digital gaming and allowing betting on professional and college sports was necessary to maximize the return.

The consultants also said sports betting should be taxed “at a reasonable rate – 15 percent or less – so that gamblers can be offered attractive enough odds to stay in state.” Using Spectrum’s projections, a 15% tax rate would raise between $35.55 million and $49.8 million per year.

Legal settlements the state receives, such as from lawsuits involving tobacco or opioids, also could be a funding source, the commission said. The commission also recommends prioritizing early care and education for funding opportunities created during ongoing efforts to overhaul the state’s tax system, though Gov. John Bel Edwards has called for any changes to be revenue neutral, meaning roughly the same amount of money should be raised.

Edwards did not include a spending boost for early childhood care and education in his executive budget proposal, saying he expected the education department to use some of their stimulus dollars for that purpose.

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