In a stunning rebuke to Gov. Rick Scott and his Lottery secretary, a circuit court judge invalidated a contract the state signed with a ticket vendor IGT Global Solutions, saying the agency overstepped its budgetary authority when it committed to the 14-year deal and obligated the state to nearly $13 million more than the Legislature had authorized.
The 15-page ruling by Leon County Circuit Court Judge Karen Gievers said that Lottery Secretary Tom Delacenserie “lacked the legal authority to enter into the IGT contract” when it obligated the state to nearly $13 million more than the Legislature authorized.
She agreed with House lawyers that state law prohibits an agency from both soliciting and signing a contract that exceeds the amount of money authorized by the Legislature and declared the contract “void and unenforceable,” sending the agency back to the drawing board to sign a lease for the full-service vending machines that provide customers with Powerball and other game tickets.
“Today's decision is a victory for the taxpayer and the rule of law,'' said Corcoran, R-Land O'Lakes, in a joint statement with Rules Chairman Jose Oliva, R-Miami, and Judiciary Chairman Chris Sprowls, R-Palm Harbor.
"It reinforces the idea that respecting the separation of powers is not an arcane idea or an out of date philosophy. In truth it is one of the bedrock principles of our republican government and is essential to protecting the liberties and livelihoods of Floridians. No branch of government is above the law and the people's House will use every power within our means – from the committee room to the courtroom – to ensure those liberties and livelihoods are protected.”
Gov. Rick Scott, whose office oversees the Lottery, issued a statement immediately saying he would challenge the ruling.
"The Florida Lottery continues to make record contributions to our public schools and today's ruling jeopardizes billions of dollars for Florida students,’’ he said in a statement. “I strongly disagree with today's decision and we will appeal."
It is the second victory for Corcoran, who sued the agency after his budget staff discovered it had inked the agreement in what appeared to be an attempt to get around the Legislature’s refusal to authorize the state to leasing more full-service vending machines.
In December, Corcoran also sued over a contract signed by Visit Florida, another one of the governor’s agencies, for refusing to disclose its $1 million contract with rapper Pitbull but he withdrew the lawsuit when the agency agreed to make the deal public.
During a hearing before Gievers on Monday, Barry Richard, the lawyer for the Florida Lottery defended the contract during a court hearing Monday, arguing that state law requires the agency to “maximize revenues” by operating as an “entrepreneurial enterprise” and said the House’s objection was an illegal attempt to “micromanage an individual contract.”
But House lawyer Adam Tanenbaum countered the agency acted first and planned to get permission from lawmakers later.
On Tuesday, during his speech on the opening day of the legislative session, Corcoran was confident that the House would prevail.
"That trial was (Monday), and I can assure you, we will win," he predicted hours before the ruling came down.
The contract, which was signed in September 2016 to run until 2028, changed the way the state pays for leasing ticket sales machines by giving the company a fixed percentage of sales from each machine, rather than pay them with a flat $500 per machine fee.
Summer Silvestri, Lottery’s procurement director, testified that by agreeing to extend the contract to 2031, the agency was able to negotiate a lower percentage fee, saving the state an estimated $18 million over the life of the contract.
But under the new deal, IGT would have gotten a slice of the sales of tickets, machines and other services. Based on projected sales, that would increase the amount the Lottery must pay IGT by an estimated $12.9 million in the budget year that begins July 1, according to the House.
For Corcoran, the fight is more than a dispute over a contract. It goes to the heart of the budgetary power that Corcoran claims has been abused and corrupted in Florida, in part because state agencies and lawmakers have let special interests reign.
During the hearing, Gievers, a former lobbyist and child advocacy lawyer, seemed aware that her ruling on high-stakes issue would likely end up in appeals court. She repeatedly urged the lawyers to complete the record in the event the hearing would be reviwed on appeal.
Here's Giever's ruling. Download Gievers order
Here's our story on the court hearing on Monday.