As reported on WRAL’s website:

RALEIGH, N.C. — About half the revenues from the $400 million that a new lottery is expected to generate in North Carolina will replace current education spending, Gov. Mike Easley’s administration says.

That isn’t what many were expecting after legislators said repeatedly last year they wanted lottery money used to increase education spending, not replace it.

“There is a pretty big disconnect, I do believe, between what is the public perception and what the actual legislation allows about the uses of lottery revenue,” state Auditor Les Merritt said.

State budget planners said in a recent presentation to debt-rating agencies that $210 million of lottery proceeds will replace money now going to the pre-kindergarten More at Four program and to reduce class sizes in kindergarten through third grade.

The governor says it’s time to use that money elsewhere.

… though there also seems to be a disconnect within the administration somewhere:

Easley officials said they will show at budget time this spring where the extra money they are freeing up from current programs will go.

Late Tuesday Easley issued a statement about the issue.

“Education lottery money will supplement, not supplant existing spending for education and I will not recommend nor sign legislation that reduces the state’s spending for education,” Easley said.