All eyes watching Indian gaming should focus on New York in the coming months. Two "situations" are currently brewing; their resolution may have significant implications for Indian gaming in other states. One concerns the possible precedent of "out-of-state" tribes operating gaming facilities in states other than where they are recognized. The other involves demands by the state legislature that state taxes be collected from businesses operating on reservation land. Both, especially the latter, could turn ugly if not handled properly.
The Seneca-Cayuga Tribe of Oklahoma plans to build and open a Class II bingo hall in the town of Aurelius, some 35 miles southwest of Syracuse. Local officials, regardless of their stance on gaming, insist that the tribe follow local building codes and permit ordinances. As a federally recognized sovereign Indian nation, tribal leaders say they need not adhere to local and state laws. While similar conflicts have erupted around many Indian-operated businesses around the country, this situation takes on an added twist in that the Seneca-Cayugas are federally recognized in Oklahoma, but have won a land claim settlement (for which its compensation determination is currently under appeal) in New York.
Today's Seneca-Cayugas are descended from Seneca and Cayuga Indians who were forced from their western New York homelands after the Revolutionary War. Members of the two tribes banded together and eventually resettled in northeastern Oklahoma, where they received federal recognition as a single entity.
Further complicating matters, the Oklahoma tribe and the Cayuga Indian Nation of New York, descendants of Cayugas who remained, have an outstanding joint land claim against the state for over 64,000 acres around the northern end of Cayuga Lake. Last year a federal judge ruled in favor of the tribes, awarding them some $247 million. The state, various local governments and thousands of private landowners promptly appealed, sending the case back into the bowels of the court system.
The ongoing land claim has galvanized a significant portion of the local populace against Indian sovereignty. Signs proclaiming "No Reservation, No Sovereign Nation" dot the countryside in the land claim area of Cayuga and Seneca counties. The locals oppose what they called a "Balkanization" of the region, which they say creates different laws for different groups of people and smacks of preferential treatment.
For their part, Seneca-Cayuga leaders have attempted to come to an understanding with county and town leaders. While the tribe continues to reject demands that they submit to local building codes, tribal leaders did offer Cayuga County a check, with no strings attached, for $15,000 late last year and have offered to negotiate similar payments in the future. The county rejected the check, which was written for an amount slightly higher than the previous year's tax bill for the 229-acre parcel now owned by the tribe.
Town officials insist that they will immediately get a court order to halt any bingo hall construction at the site, but have not indicated the degree, if any, of force they are willing to use. Tribal leaders are equally determined to press forward with their plans.
The larger issue, however, involves the Seneca-Cayugas' "out-of-state" status. Certainly, nobody denies that the land claim area was once home to the current tribe's ancestors. But the fact that the Seneca-Cayugas are federally recognized as an Oklahoma tribe and not a New York one is crucial. The Indian Gaming Regulatory Act of 1988 gives federally recognized tribes permission to negotiate compacts with the state in which their territory is located, but doesn't directly address the concern of where a tribe is recognized.
Although their land claim award victory against the state is under appeal, the Oklahoma tribe believes that any land they reacquire within the claim area instantly reverts to "Indian country" and is thus not subject to state and local legal and tax provisions. Local politicians believe otherwise. It will be interesting to observe the manner and the speed with which the BIA and the National Indian Gaming Commission rule on this matter, which could have implications for dozens tribes now residing elsewhere than their original homelands.
The tax man cometh?
New York's other "situation" is so potentially dangerous, it boggles the mind that the legislature had the irresponsibility to force it.
On May 2, the legislature finally released its budget proposal for the current fiscal year (which in New York begins on April 1). The fact that the Assembly and Senate were late with their budget for the 19th straight year, while appalling, is of little consequence here; nor are the specifics of their budgetary differences with Republican Governor George Pataki.
What is incredible is that in its budget the legislature included revenue projections based upon the collection of sales taxes on gasoline and tobacco sales to non-Indian customers at reservation businesses. Yes, the state is hemorrhaging financially, with a projected budget deficit well into the billions of dollars.
Legislators project that some $186 million can be collected in 2003, while another $374 million would come to the state in fiscal year 2004. But, aside from the shaky reliability of these revenue projections (upon what are they based?) what were New York's Assembly members and senators thinking?
The last time Albany tried to collect such taxes, in 1997, violence erupted in both the western and northern parts of the state. After weeks of blocked Interstates and threats of serious bloodshed, Pataki wisely ceased further collection attempts and has since pursed a policy of government-to-government negotiations with New York's resident tribes.
After overriding Pataki's vetoes of their proposed budget on May 14, legislators are playing politics to force the governor's hand. Pataki has been mum on whether or not he will comply with the Legislature's insistence that Indian businesses collect state taxes. Likewise, the Legislature has not indicated any coherent mechanism for making such collections likely or even possible.
After Sept. 11, 2001, New York's legislators had the foresight to authorize a half-dozen Indian casinos in hopes of tapping into their revenue stream for the state coffers. Today, only one of those casinos (in Niagara Falls) is up and running, but not for lack of effort on the Indian side. The Seneca Nation of Indians' feat of getting that establishment up and running in a mere 100 days following their own positive referendum was remarkable. The Senecas are currently looking to site their second casino, while Pataki and the St. Regis Mohawks on May 12 signed an agreement for the first of the three Catskill casinos, leaving two more open for compact negotiation.
These casinos will certainly provide much needed revenue for the state. Most savvy Indian leaders have realized that the de facto price for a compact is a portion of slot machine revenue and seem generally willing to negotiate it. Pataki and the Mohawks, as reported in Indian Country Today, (Vol. 22 Issue 49) were also able to come to an agreement on price parity as a way to solve price competitiveness while not seeking to forcing state tax laws on the sovereign Indian nations.
But New York's elected legislators, in trying to force reservation business to collect taxes, appear to have lost touch with the reality that exists within the state's borders. Indian business owners and tribes virulently oppose acting as state agents and have demonstrated their commitment to standing by what they believe. Forcing the issue, as the Legislature is doing, is irresponsible and even reckless.
The resolution of the tax issue will be fascinating. Let's hope it can be done peacefully.