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Let the Games Begin: Revenue sharing held hostage?

Recently, we chastised state officials in New York for delaying the retroactive approval of two gaming compacts while trying to extract revenue sharing concessions from the tribes involved. In essence, Albany held the compacts as hostages, gaining fiscal concessions from one tribe but not the other. Now, a third New York tribe could try to play the hostage holding game on its own terms.

In early January Barry E. Snyder Jr., chairman of the Seneca Nation's tribal council, suggested that the nation place the estimated $38 million owed to the state under gaming compact provisions in escrow until "some issues are straightened out." Those "issues" involve state efforts to get the Senecas to collect taxes on reservation sales of fuel and tobacco to non-Indian customers.

Snyder hopes to get state officials to reconsider plans to begin collecting sales taxes on most reservation tobacco and fuel transactions beginning March 1. A group called the Senecas for Justice and Preservation shares Snyder's sentiment; it had previously filed a motion to temporarily block the compact payment in Seneca Peacemakers Court.

Under the 2002 compact, 18 percent of slot machine revenues are paid to New York state. That amount for calendar year 2003 is estimated at $38 - $40 million. (That percentage eventually increases to 25 percent over the 14-year life of the agreement.) The compact also stipulates that the City of Niagara Falls receive funds for economic development, which total approximately $9.5 million for the year. While the risk of antagonizing local governments who are desperately counting on the money is quite real, the tribe's strong entrepreneurial base allows for no compromise on the taxation issue.

Seneca officials steadfastly insist that state taxation of commerce on their land is illegal by treaty and that the nation will not cooperate. While tribal leaders say they do not condone violent behavior, many in western New York fear the same if a tax agreement is not reached. Previous efforts to collect taxes on the state's several reservations ended quickly in 1997 after irate Indians blocked two Interstates.

What happens if this time the state doesn't back down? According to a Jan. 4 report in the Buffalo News, Chairman Snyder opined that since the compact doesn't specify a date on which the payment must be made, the nation could hold onto the money to show its seriousness. Seneca President Rickey L. Armstrong Sr., while sharing frustration over the tax issue, does not support withholding the compact payment. Snyder will formally propose that the council retain the funds; a vote on the matter could take place at its next meeting on Jan 10.

Formally delaying the compact payment will certainly get the state's attention. But will it solve anything or only stiffen resolve on both sides?

The Seneca-Niagara opened its doors just over a year ago, on New Year's Eve 2002. The first of six Indian gaming facilities authorized by Albany in 2001, it has drawn hundreds of thousands of people to the depressed city and created a couple thousand desperately needed jobs. But a casino is not a panacea - at best it can act like an "anchor tenant" at a shopping mall, attracting both consumers and other businesses and forming a foundation upon which economic growth can occur.

Indeed, the casino has not magically jumpstarted the moribund Niagara Falls economy all by itself, as some may have naively believed it would. While the state is helping to build a new convention center nearby (the casino is in the old one) adjacent private development has yet to materialize to any great degree. While continuous economic hardship is certainly a frustrating state of affairs, the good people of Niagara Falls must be patient. After being blessed with one of the world's greatest tourist attractions, they now have a second attraction, the casino, around which development can occur. But such growth cannot happen overnight.

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Meanwhile, calm tribal-state relations are crucial. The longer tribe and state continue to butt heads over taxation issues, the more caution and restraint developers and business owners will exercise before investing in the area. With so much on the line, it is imperative that Seneca leaders and state officials reach some sort of compromise on the tax collection issue.

Madison County blues

On Jan. 5, the board of supervisors of this rural upstate New York county considered a resolution urging Governor George Pataki to enforce tax collection on businesses owned by the Oneida Indian Nation and to reimburse the county for property taxes lost on nation-owned land within the county. No word on the result of the resolution was available by deadline.

According to the Oneida Daily Dispatch, the supervisors cited the loss of nearly $1 million in property tax revenue on 6,400 acres of nation-owned land within the county, and estimated that Oneida-owned businesses cost the county some $3-$5 million in sales tax revenue as the basis for their complaints. While the property tax revenue is easily calculable, no source was given for the sales tax numbers.

The Dispatch reported that the supervisor who proposed the resolution did so in hopes of alleviating the county's growing Medicaid burden, which now exceeds 44 percent of its property tax levy. On last check, however, the continuing trend for cash-strapped states to push unfunded mandates on their subordinate counties was not the fault of Indians.

In 1996, the Oneida Nation of New York established its Silver Covenant Chain grant program, whose purpose is to provide funds for local school districts and municipalities in which the nation owns property. As of Oct. 30, 2003, some $5.8 million had been distributed over the life of the program to seven area school districts, a town and a village. Funds have been used to pay teacher salaries, fund scholarships, acquire computers, books and other equipment, and in a couple of cases to lower tax rates.

Madison County, however, has opted not to link to the Silver Covenant Chain, as doing so would implicitly recognize Oneida Nation sovereignty over its own territory. So, rather than acknowledging the reality of Indian sovereignty and accepting a "payment-in-lieu-of-taxes" that could go a long way toward reducing citizens' tax burdens, the Madison County supervisors chose another path.

Instead of cooperating with and accepting help from their neighbors the Oneidas, these supervisors instead waste their time drafting resolutions that will not solve their problems. Funding constraints for Medicaid and other federal programs won't go away by taxing local Indians - these are nationwide problems that seek federal solutions.

By joining Silver Covenant, the supervisors would be progressively looking out for the fiscal interests of their county and its residents. Instead, they choose to bark up the wrong tree. Who voted for these guys anyway?