Beginning in 2009, Texans could start buying scratch-off lottery tickets that did something unusual amid all the convenience store offerings -- support a specific program.
The $2 Veterans Cash game supports the Fund for Veterans' Assistance, which issues grants to nonprofits around the state to provide counseling, transportation, housing and child care for veterans and their families. It is the only game in the state with dedicated revenue, a measure supported enthusiastically two years ago by some in the North Texas legislative delegation.
But the budget crisis has arrived even to the Veterans Cash scratch-off game.
Sen. Steve Ogden, R-Bryan, a former naval officer, inserted a rider into the Senate budget bill that would divert some of that grant money from the Fund for Veterans' Assistance to cover budget cuts within the Texas Veterans Commission.
Many of the leaders of the state's major veterans organizations are troubled by the suggestion that state employee salaries are more important than veterans programs in Fort Worth, Houston and San Antonio.
"If they do that, it's going to be a major turnoff for the veterans community," said John Miterko, legislative liaison for the Texas Coalition of Veterans Organizations, a group that represents 35 organizations such as the American Legion, Veterans of Foreign Wars and Vietnam Veterans of America.
The issue got legislatively murkier Wednesday, though.
The Senate Committee on Veteran Affairs and Military Installations unanimously passed a bill from Sen. Wendy Davis, D-Fort Worth, that would prohibit revenue from the lottery tickets to be used for state employee salaries. That bill would allow the lottery money to be spent only on grants.
"If one of our highest priorities is going to be providing services to combat veterans, then we should not be diverting the Veterans Cash scratch-off funds to general revenue or allow the funds to be raided during a budget crisis," Davis said.
The state is lumbering toward a multibillion-dollar crisis in the next two fiscal years that will require deep spending cuts and/or revenue increases. The House of Representatives passed a budget last weekend that would trim $23 billion from spending and eliminate more than 7,000 jobs. The Senate is still a few weeks from passing its budget.
Among the many state agencies facing cuts is the Texas Veterans Commission, which is projected to have to slice $2.8 million from its two-year budget.
The commission has plans to trim about 22 employees, most of them benefits counselors who help veterans apply for compensation from the U.S. Veterans Affairs Department.
Ogden's rider would divert $2.8 million from revenue generated by the scratch-off tickets and use it to cover the hole in the commission's budget.
The rest of the revenue from the lottery would continue to go toward the Fund for Veterans' Assistance, which the commission administers and oversees.
Jack Mason, an analyst with the Legislative Budget Board, said in a Senate Finance Committee hearing that the revenue swap would not negatively affect veterans services and that the maneuver is in keeping with the fund's purpose.
Officials with the commission have not taken a position on Ogden's rider.
"If there is a silver lining, we would be able to keep our staffing levels the same and continue to provide services to the veterans directly," said Duncan McGhee, commission spokesman.
But McGhee acknowledged concerns within the commission over that "silver lining."
"We spent a lot of time getting the veterans organizations behind this lottery ticket program and supporting it," he said. "I don't know how well it's going to be received that some of that money will be funding a state agency."
Since the game hit the shelves in November 2009, it has generated more than $52 million in sales, almost a quarter of which goes into the Fund for Veterans' Assistance. The rest is used for administrative expenses, marketing and payouts.
The popularity of the scratch-off tickets among veterans, Miterko said, stems from its direct support of veterans and their families. More than $5 million in grants have been issued to organizations statewide.
For example, Mental Health Mental Retardation of Tarrant County has received a $846,000 grant to meet emergency financial needs, employment training and job placement, housing assistance for homeless, and counseling for veterans and families.
Taking some of that money and putting it into administrative costs for the commission will harm the game's appeal with veterans, Miterko said.
"I can't back anything up with statistics, but based on my conversations with the veterans community in Texas, I believe the veteran community will, if not stop, at least curtail dramatically the number of scratch-off tickets they're buying," he said.
The Senate Veterans Affairs & Military Installations Committee on Wednesday unanimously approved Senate Bill 1739, which is expected to counter Ogden's rider to the budget bill that would redirect money created by the scratch-off ticket from a permanent fund for veterans assistance.
The bill forbids funding diversions from the scratch-off.
The money from the scratch-offs helps keep veterans in their homes and has supported new courts in San Antonio, Fort Worth and Houston that help keep veterans out of jail.
About $11 million has been raised since the tickets first were sold on Veterans Day 2009, with grants given to groups statewide. The $2 scratch-off ticket has helped 37,000 Texas veterans, but up to one-third of the funds from it would be diverted by Ogden's rider.
Miterko, who with others testified before the veterans affairs committee Wednesday, is sympathetic to Ogden, a Navy veteran. But he said there would be a "significant decline" in scratch-off sales if the money from the tickets goes to administrators instead of directly supporting veterans
"The net result, I think, is going to be a disaster," he added.
The Veterans Commission's executive director, retired Army Col. Thomas Palladino, supported SB 1739, authored by Sen. Wendy Davis, D-Fort Worth.
Palladino told legislators that while Ogden's provision would help the agency, it would hurt veterans benefiting from the scratch-off tickets.
Ogden, a veteran of the Navy's submarine service, told an Express-News reporter that he would revisit the issue and possibly reverse his decision.
"I meant no harm. We were trying to make sure that our veterans commission was adequately funded and to the extent that it's only $2 million we'll take another look at it," he said.
Palladino said the scratch-off proceeds should not be used for any agency, including his own.
"It is to provide funds for organizations out there that help veterans down where the rubber meets the road, and that's where that money should go," he said.
Bexar County's Veterans Court received a one-year, $40,000 grant from the scratch-off program. The United Way of San Antonio and Bexar County got $260,335 for an around-the-clock call center for troops and families.
Roy Grona, the foundation's executive director, said the grant has been used to help 682 veterans and widows in Texas with everything from getting cars fixed to paying utility bills. He told the committee about a Von Ormy couple, both Vietnam-era veterans, who were able to keep their home after the foundation gave them a $1,970 grant.
Any diversion of scratch-off ticket funding, Grona fears, would hurt the foundation, which is the only group to provide grants around the state.
"Mr. Chairman, members, I urge you, let's do the right thing with the money," he said.
Express-News Austin Bureau chief Peggy Fikac contributed to this report.