The state’s largest public employee union has given $300,000 to the campaign for Proposition 1C, the lottery modernization measure that would allow the state to borrow up to $5 billion from lottery proceeds.

The money comes as deep divisions swirl among the Service Employees International Union over how to play in the May 19 special election. SEIU’s state council has opposed Proposition 1A, the state spending limit measure, and opened an account earlier this week to launch a formal campaign against 1A.

But SEIU has endorsed Proposition 1C, and a spokesman for Local 1000 said it makes sense for the union to support the measure.

“Our position on Prop 1C is consistent with our position that the state of California could be generating more money out of the lottery if it had a different managerial structure,” said Local 1000 spokesman Jim Zamora.

SEIU’s contribution did not go to the committee controlled by Gov. Arnold Schwarzenegger’s political team, which is pushing for passage of all of the May 19 measures. Instead, th money went to a committee sponsored by GTECH, a Rhode Island-based company that contracts to supply lottery equipment to the state.

Roger Salazar, a spokesman for the Yes on 1C committee, welcomed news of the contribution. “One thing we all agree on is that if we can generate additional state revenues without tax increases, it makes sense for everyone,” Salazar said.

But the big question remains the extent to which the state council will fund the No on  Proposition 1A campaign.  

Stay tuned.