Lottery sales continued to set records during the first quarter of this year while Georgia legislators were passing legislation to keep the lottery-funded HOPE scholarship from running out of money.

Lottery figures showing a 6 percent growth rate in sales during the first three months of 2004 and a record pace for this fiscal year will be released today. Just three weeks ago, the General Assembly approved a bill slowing costs for HOPE, which provides college scholarship money to more than 200,000 Georgians.

"They definitely overreacted to the HOPE scholarship situation, and that overreaction was dangerous to HOPE scholars," said Lt. Gov. Mark Taylor, a leading critic of attempts to cut the program's benefits. "The Chicken Littles are still out there."

But Sen. Bill Hamrick (R-Carrollton), the Senate Higher Education Committee chairman who led the fight to pass HOPE legislation, said strong lottery sales would only delay the program's inevitable financial problems.

"The fundamental problem is still there, in terms of the number of students that qualify and the cost of HOPE," Hamrick said.

Through three quarters of the current fiscal year, which ends June 30, sales are up more than $100 million compared with the same period last year, according to lottery figures. The games have transferred $589 million to the state for HOPE and pre-kindergarten programs so far this fiscal year, up $53 million from the same period during fiscal 2003, which was itself a record year.

Even if sales do no more than remain stable in the fourth quarter, the lottery will produce about $100 million more this fiscal year than the state is spending on HOPE and pre-kindergarten. Margaret DeFrancisco, president of the Georgia Lottery Corp., said sales continue to be strong in part because staffers keep introducing new games. And it helps that a share of the money goes toward education, because people are more likely to play when the money goes for something good, lottery officials say.

During the first few months of 2004, lottery sales also were helped by a $239 million Mega Millions jackpot that built in January and February. Mega Millions ticket sales in Georgia increased $24 million from January to March.

DeFrancisco said she hadn't seen a big impact from the lottery launched this year in neighboring Tennessee. State officials last year predicted it would hurt Georgia sales.

At the same time the lottery was scoring brisk sales this year, lawmakers were debating whether to cut back on HOPE benefits because of concerns that costs would outpace revenue within a few years.

Using projections based on stagnating lottery sales, state officials predicted that HOPE and pre-k would begin eating into their reserves by fiscal 2006 or 2007 due to pressure from rising college enrollment and costs. Lottery reserves stood at $251 million as of last summer.

Under HOPE, Georgia high school students with a B average or higher receive full tuition along with mandatory fees and a book allowance to attend an in-state public college.

Early on, Gov. Sonny Perdue and a HOPE Study Commission advised eliminating book and fee payments to students this fall to cut costs. But Taylor and some Democratic legislators objected.

By the time the Legislature ended April 7, Perdue had restored the book and fee money because of opposition in the General Assembly. However, the governor is poised to sign into law a bill that would freeze fee payments to students and gradually eliminate book and fee money if the HOPE fund dips for three years.

The measure also would use a tougher 3.0 grade-point average requirement to decide which students get the scholarship.

Shelley Nickel, director of the Georgia Student Finance Commission, which administers HOPE, agreed with Hamrick that the good lottery sales numbers don't address the underlying problem of rapidly rising college costs.

"Costs are still growing faster than the [lottery] revenue is growing," Nickel said.

However, Taylor, a Democrat who plans to challenge Perdue in the 2006 election, argued that the new lottery sales figures show the Republican governor was wrong to advocate cutting benefits.

"We've got a real fight on our hands to change people's perceptions that the HOPE scholarship is in trouble," said Taylor. "The HOPE scholarship is not in trouble."