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Morgan Speaks on Economic Development at Hearing

WASHINGTON – The Pine Ridge reservation comprises all of Shannon County in South Dakota, and for the best part of two decades Shannon was the poorest county in the United States. Now though, according to the latest information cited by Elsie Meeks, executive director of First Nations West Corp. in Rapid City, S.D., Shannon County has more than moved up from the bottom of the poverty list – it now leads all South Dakota counties in employment growth.

And the new poorest county in the United States? Buffalo County, northeast of Pine Ridge in central South Dakota and home to the Crow Creek Sioux Tribe.

Why is it so often like this? How is it that the poster child for American poverty may change, but seemingly must remain an Indian child?

The Senate Committee on Indian Affairs held a hearing May 10 in part to find an answer. The committee heard from six stellar witnesses, but on that one point of why all the poverty they could have stopped at Lance Morgan, CEO of Ho-Chunk Inc., the economic development power station of the Winnebago Tribe in Nebraska. Ho-Chunk Inc. has gone from one employee in 1995 to 525 now, from revenues of $400,000 to almost $1.5 million – “all completely non-gaming,” Morgan noted.

“It’s something that we’re very proud of. When I think about this though ... we really are an exception I think in a lot of ways, because of the difficult environment that we have to function in. And I’m not going to belabor it because several panelists have talked about the trust land system. But it doesn’t allow us to have property taxes ... No home ownership, no intergenerational wealth, no collateralizing of loans, those kinds of things. So it’s pretty much the most difficult environment possible to do development in the United States.

“And the federal government has been pretty aggressive in developing programs that are designed to implement, are designed to emulate, the American economic system off the reservation. But they’re usually limited in scope and don’t have much impact.

“So tribes are told to go into business. If you don’t have a tax base, you can’t develop your own economy. .… The federal government encourages us to go into business, and use those profits in lieu of the taxes to develop the economy. And the tribes with no collateral, no experience, no wealth, no capital – and going into business usually don’t mix. ... This system, this trust land economic system, is not a system that we created or designed. We are desperately trying to figure out ways to function within it.

“And what we have done over the years is exploit tribal jurisdiction. And if you think about it, we’ve developed a bit of a stereotype of what kind of a business tribes get into – gas, tobacco, now gaming. And those are not tribal businesses per se. Those are businesses that we can get into that allow us to exploit our jurisdiction and create advantage. The problem with those types of businesses is that they’re controversial. They tend to interfere with state rights, or they tend to upset the playing field where non-Indian economic interests are already entrenched. So we do not believe that those are the future.”

“To judge from examples that cropped up throughout the May 10 testimony, the immediate future of tribal economies is still in the grip of federal oversight and control of tribal resources.

Tourism’s a good idea for Indian country? But the potential has never been realized because of poor infrastructure – bad roads, a scarcity of hotel and camper/trailer accommodations, few and far-between pit stops for gas and snacks, and even fewer rest stops.

To paraphrase some of the testimony presented at the hearing:

Oil, gas and minerals leases? But the BIA, geared toward grazing-land leases, has been a tireless obstruction.

Contracting? Just as tribal organizations like Ho-Chunk Inc. begin to know the ropes of a complicated industry, Congress begins to have second thoughts about a successful minority preference program, in this case the Small Business Administration’s 8(a) program.

“And now we have to look over our shoulder,” Morgan said.

Gaming? Ditto, more or less. But also, as emphasized by Sen. John McCain, R-Ariz., the committee chairman, some tribes with singularly successful casinos have unemployment rates of 97 percent or more, for reasons unknown.

The 1989 tribal self-governance demonstration project? It has lost steam not because of tribal reluctance to take on decision-making responsibilities, but because the federal budget has shrunk. Should tribes that go for self-governance run out of federal funds in administering their own programs, they fear they’ll face liability issues.

Self-determination under Public Law 93-638? So-called “638 contracting” has been good for tribes, noted Miriam Jorgenson, research director of the Harvard Project on American Indian Economic Development. But the current configuration of federal policy has led some tribes to stop at self-administration, “just running programs with federal dollars ... being a branch of the federal government” instead of seizing the entrepreneurial potential within jurisdictional sovereignty.

Eventually the hearing steered clear of the many hurdles to Indian economic development and focused on the modest but steady gains in private sector prosperity that characterize a great many tribes.

Responding to the question from Sen. Byron Dorgan, D-N.D., Meeks described these gains as baby steps rather than giant strides, at least on Pine Ridge.

“I mean, I think we’re taking baby steps, but I think we’re headed in the right direction. And to tell you the truth, I don’t think there’s any way to do it but to take baby steps. And you know that’s why I’m such a proponent of small business development, because as I said ... I have a grocery store, a business at Pine Ridge, and we hire about 20 people. Let me tell you, we had to look very hard to get that 20 people, a good core group, because people haven’t worked for years. ... So, it’s headed in the right direction.”

Of critical importance here, Dorgan related, is that it’s private-sector employment. He called private sector businesses the key to “unlock opportunity” in the pockets of poverty found throughout Indian country.

McCain said it might be time to offer an update of the 1989 self-governance law, with beefed-up funding and other incentives for tribes to opt in. He added that new research needs to be done on tribal self-governance, with a view to getting the word out on its track record as a predictor of economic prosperity.