Per Under the Dome:

Gov. Beverly Perdue may use up to $88 million in lottery funds.

When it passed in 2005, lottery supporters pledged that proceeds from the state’s lottery would only go to education. Then Gov. Mike Easley even called unsuccessfully for a constitutional “lockbox” on the funds.

But given a potential $3 billion shortfall, Perdue is considering tapping into the money for the general budget. …

This is in line with other recent unsurprising news. Also, the Locke Foundation essentially predicted it in Agenda 2008:

There’s an old principle that governments raise taxes not to support key functions, but to support the most trivial ones ? i.e., ones that lawmakers would cut in the name of efficiency and good government, but decide to keep in the name of higher taxes. The wisdom of this observation is illustrated to absurd extents by appropriation replacement, as funds that once would have gone to education now find their ways into various other public programs, liberated, as it were, by the lottery revenue.

The replacement problem first raised its head in North Carolina in early 2006, when The News & Observer reported that lottery revenues would supplant more than $200 million in general funds devoted to schools. It turned out that the original bill included language intended to prevent new lottery proceeds from replacing existing school revenue, but that language was dropped from lottery provisions in the state budget bill (not that legislation could effectively stem the replacement problem, owing to the fungibility of money).

Older state lotteries begin to compound the problem of supplanting through something lottery researchers have termed lottery fatigue. …

In the long run, studies have shown, lottery states are left with lower per-capita spending on education than states without lotteries. This is the next step for N.C.’s lottery.