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Montana honors tribal vehicle tax exemption

HELENA, Mont. - Montana tribal governments and tribal members living on their own reservations will continue to be exempt from state vehicle taxes despite a voter-approved ballot measure changing the state's vehicle tax to a fee, Attorney General Joe Mazurek said.

The measure, Legislative Referendum 115, will reduce vehicle taxes for 80 percent of Montanans, but language designated the tax as a "fee" and would have required tribal members to pay the state to register their cars and trucks.

Tribal members have long been exempt from certain state taxes, including motor vehicle taxation, because of federal statutes and treaties protecting American Indians and their property. This protection was given to American Indians in exchange for vast amounts of Indian land. Indians, in other words, have already paid for their tax immunities.

Tribal leaders learned of change just three weeks before the election when the Montana County Treasurers Association said since the fee was no longer a tax, tribal communities will no longer be exempt.

However, Mazurek's Dec. 12 ruling says the vehicle registration fee is still essentially a tax.

"The law in Montana is clear about when something called a fee must be considered a tax," Mazurek said. "And under the standards adopted by the federal courts and prior attorney general opinion, the new 'fee' is essentially no different from the taxes it replaced and which the federal district court determined cannot be assessed against tribal members or tribal governments."

The measure instilling a flat-fee based on the age of Montana vehicles will go into effect Jan. 1, changing the current system where vehicles are taxed based on the vehicle's value.

Mazurek said "the new fee is very similar to a 1981 motor vehicle license fee that was found to be tax", and mentioned that both an opinion issued in 1981 by Attorney General Mike Greely and a 1983 Montana District Court ruling on a similar issue in Assiniboine & Sioux Tribes vs. Montana (568 F. Supp. 269) set clear direction on his decision.

Mazurek instructed the Motor Vehicle Division to administer the new fee with the same exemptions that existed under prior law which also includes cities, counties and several other classes of vehicles.

Jonathan Windy Boy, chairman of Montana-Wyoming Tribal Leaders Council and Chippewa Cree council member, requested the exemption from the state.

"I feel good about the attorney general's opinion," he said. "It solidifies my confidence I have with the future relationship between tribes and the state of Montana."

The exemption, along with a recent meeting with Republican Gov.-elect Judy Martz, where she committed to a proclamation that will reiterate a government-to-government relationship between the tribes and the state, is a positive step for tribal governments, Windy Boy said.

Attorney General-elect Mike McGrath told Montana Indian leaders he will stand up for tribal rights during his recent campaign for office. McGrath said he will honor tribal exemption and will ensure tribal sovereignty is respected.

Mazurek said his decision would be a disappointment to Montana's reservation-based counties, which had hoped a federal court decision in the 8th U.S. Circuit Court in South Dakota would pave the way for the fee to be applied to tribal members and governments.

The 1997 case, involving a similar tax issue between the Cheyenne River Sioux Tribe and the state of South Dakota, was decided in South Dakota's favor but had no direct precedent in the 9th U.S. Circuit Court, which encompasses Montana.

Before the election, Montana tax officials said the fee would raise $1.1 million from tribal members who now do not pay the vehicle tax.

Mazurek noted that with some exceptions, the money raised by the new fee is deposited into the same accounts as the prior taxes, so the fee is essentially a tax.

The 2001 state Legislature will have to clarify this exemption in state law.

The ballot issue's effect on tribal members was unknown when the 1999 Legislature passed the ballot measure. There was no discussion among the lawmakers about it being applied to tribal members and tribal governments.

If there is any dispute among the lawmakers, support for this exemption is certain to be voiced. A record number of Indian legislators will serve in the upcoming session, five in the House of Representatives and one in the Senate.

The author of the bill, Rep. Larry Grinde, R-Lewistown, said the legislation wasn't intended to target tribal members.

"It was meant to make it fair for everybody and this is the only way I could find to do it and they just happen to fall under that statute," he said.

But the fact that measure's effect on tribal members wasn't considered until three weeks before the election symbolizes a larger political problem, tribal leaders say.

Tribal leaders concerned about tribal sovereignty and rights said they will be watching closely for attempts to diminish their inherent rights through legislation.

Windy Boy and state legislator Rep. Carol Juneau, D-Browning, acknowledged the need for an eagle eye for tribes in Washington, D.C., and in Helena to inform tribes of impacting legislation, such as LR-115.

"We want to at least be afforded the courtesy of what the effects are, rather than have to deal with it after the fact," Windy Boy said.