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Davis scales back added revenue request

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SACRAMENTO, Calif. - Since proposing that the state ask for $1.5 billion from gaming tribes in exchange for increased machine licenses it was widely expected that Gov. Davis would ultimately ask for less, which is exactly what he did this past week.

Gov. Davis had originally signaled his intent to ask tribes for revenue to help crop the state budget deficit, which is now conservatively estimated to be somewhere in the neighborhood of $38 billion.

Now the governor has scaled back his proposal to $680 million. The move is not really a surprise. After he had made his initial announcement, Davis had signaled that he might cut back on the actual amount he would request.

Since tribes can not be legally taxed or otherwise coerced to cough up the added revenue, the state's only major bargaining chip is to lift a current cap on the number of machine licenses that a tribe can purchase. Currently tribes are capped at 2,000 machines.

The tribal/state gaming compacts are currently being renegotiated, which gives the governor a window of opportunity to both lift the machine license cap and ask for the added revenue.

After Gov. Davis had made his initial request for $1.5 billion many tribal officials and tribal gaming lobbyists roundly denounced the governor, whose request roughly equaled one half of California tribe's estimated $3 billion total net revenue.

However, tribal reaction to the scaled back figure of $680 million is generally not much different from the larger request and is meeting with the same derision in some quarters as Gov. Davis' earlier figure. Many are wondering aloud how the governor has arrived at such figures.

"We have no idea what formula the governor is basing his revenue requests on," says Susan Jensen, a spokeswoman of the California Nations Indian Gaming Association. "We don't know if he's using some kind of mathematical formula or if he's just pulling it from the sky."

Jensen says the fact that the governor scaled back the proposal makes no difference to tribes and describes it as "basically the same situation."

The basic problem, says Jensen is that the governor did not consult or even inform tribes of his methodology in calculating the figures.

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Amber Pasricha, a spokeswoman for Gov. Davis says that the reduced request reflects a more "conservative" estimate from the governor's office.

Since Gov. Davis has to submit a budget plan to the state legislature by July 1, Pasricha says that the slow pace of the current compact re-negotiations might effect the revenue timing and thus needed to scale back on his original proposal.

However, Pasricha says she is unsure how Davis reached the $680 million figure.

Pechanga tribal chairman Mark Macarro has been a vocal critic of the increased revenue plans and thinks that the very fact that the governor has reduced the actual amount is a concession on his part that the original $1.5 billion proposal was "absolutely ludicrous."

Macarro agrees with Jensen that the figures seem to be arbitrary.

"I think numbers are being plucked from very thin air by a budget advisor with blinders on," says Macarro.

Attorney Howard Dickstein is representing several tribes that are currently renegotiating their gaming compacts and like Jensen and Macarro is puzzled as to how the governor reached the $680 million figure.

However, Dickstein differs from Macarro on the point of what the reduced figure means.

"From the tribes point of view, it's (the reduced proposal) making progress," says Dickstein.

When asked if any of the tribes that he represents would be willing to pay increased revenue to the state, Dickstein said it would depend on several factors, such as Davis agreeing to lift the cap on the machine licenses.

Dickstein says that his tribes would only consider increasing the revenue under such circumstances and contends that Davis has yet to make the offer of lifting the cap official. Given the snails pace of the compact re-negotiations, Dickstein wonders whether the governor can get such a proposal before he has to submit his budget on July 1.