By John Lyon
Arkansas News Bureau

BEEBE — The Arkansas Lottery Commission voted today to review salary offers made to the lottery’s top new hires after Gov. Mike Beebe complained that the high salaries going to lottery employees are undermining public confidence in the fledgling operation.

The vote came on the same day that the state lottery director announced another new employee at a six-figure salary.

“You’ve got to have the majority of the folks of your state that are confident that you’re doing the right things, and a lot of these decisions with regard to the amount of the salaries that are being paid … are having the effect of undermining that in my opinion,” Beebe told reporters this morning.

“We’re seeing it anecdotally. I haven’t seen polls, but you see letters, you see comments, you hear discussions,” he said.

Beebe’s remarks came on the heels of Lottery Director Ernie Passailaigue’s hiring of Grant County Sheriff Lance Huey to be security director for the lottery at an annual salary of $115,644 – exceeding Arkansas State Police Director Winford Phillips’ salary of $108,082.

Asked to comment on Huey’s pay, Beebe said, “Are you asking me should that investigator in my opinion make more than the state police director? No.”

Meeting this afternoon on the Beebe campus of Arkansas State University, the Lottery Commission voted 6-2 to begin reviewing new lottery hires offered annual salaries of $80,000 or more, over the objections of its chairman, Ray Thornton of Little Rock.

Commissioner Derrick Smith of Little Rock made the motion to have the commission’s four-member personnel committee review large-salary job offers.

“As a commission I think we’d like to play as much role in helping as we can,” said Smith, who is not on the personnel committee.

“Let me urge that this is a mistake and I will vote against this motion,” Thornton said before the vote.

Thornton said having the panel review individual personnel decisions could jeopardize meeting an Oct. 29 target date for the lottery startup and might overstep the commission’s authority. State law only authorizes the commission to do the hiring for certain positions, he said.

Commission member Patty Shipp of Morrilton also voted against the motion. Member George Hammons of Pine Bluff was not present.

Passailaigue said he had no problem with a commission review.

The lottery panel hired Passailaigue last month at an annual salary of $324,000. In addition to Huey, Passailaigue has hired two vice presidents at salaries of $225,000 each, an IT gaming director at a salary of $150,000 — that job went to Michael Smith of Schenectady, N.Y., Passailaigue announced today — and five other people at salaries ranging from $92,500 to $105,000.

“What’s it going to cost for a vendor?” Beebe said earlier. “What are the numbers going to look like in terms of administration? Administrative costs, running the lottery, certainly payouts – all will affect the net available for scholarships.”

Beebe said he has mostly tried to stay out of the lottery’s business, but “at some level it ultimately then gets to the point where you get concerned about it, for the reasons I’ve just stated, and sometimes you’ve got to say a little more.”

Lt. Gov. Bill Halter, who proposed the constitutional amendment voters approved in November to create a state-run lottery to fund college scholarships, also weighed in on the topic Wednesday. Through a spokesman, Halter said he was surprised by some of the lottery salaries and was pleased the commission voted to provide a further level of review.

In a 23-minute address to the Lottery Commission this afternoon, Passailaigue defended his hiring decisions. He said the team he has assembled has the knowledge to be able to train less experienced people who will be hired later.

“If I had to sit down and train 89 other people, I think logic would tell most of us that that would take a longer period of time. How long I don’t know, maybe a day, maybe a week, maybe a month, but every day that went by because this was a necessity would require another $250,000 of scholarship money … going down the drain,” he said.

Passailaigue said South Carolina’s lottery, which he ran from 2001 until the end of June, had one of the lowest ratios of expenditures to revenue in the country.

“I don’t go around … just throwing money around,” he said.

Passailaigue said it was unfair to compare Huey’s salary to the salary of the state police director because the lottery’s security director will have different responsibilities, including policing between 2,500 and 2,800 retailers.

“Ladies and gentlemen, the Arkansas lottery is a $400 million bank. … I don’t know what the biggest bank in Arkansas is and I don’t know how many locations they have, but I don’t think it equals 2,500,” he said.

Passailaigue also clarified a statement he made recently to legislators that the average Arkansan won’t understand what is involved in starting up a lottery. Passailaigue said he did not mean to imply that Arkansans are stupid.

“I said the average Arkansan does not understand this because they are not sitting in your shoes,” he said.

Also today, the commission approved a request for proposals from companies interested in providing advertising services to the lottery. Passailaigue said he does not yet know how much the lottery will spend on advertising.