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New York seeks cigarette tax revenue sharing agreement

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By Mark Johnson -- Associated Press

ALBANY, N.Y. (AP) - Gov. Eliot Spitzer wants to impose a tax on Indian cigarettes that would end tribes' price advantages over non-Indian competitors, but share the revenue with Indians, the administration said March 20.

Spitzer's effort to settle the issue of collecting taxes on sales to non-Indians by tribal businesses comes as the federal government is ''reconsidering'' its 1993 approval of the compact that allowed the Oneida Indian Nation to open the Turning Stone Resort and Casino in central New York.

A March 15 letter from Interior Department Deputy Solicitor Lawrence Jensen gives the two sides until April 30 to notify the Interior Department they've begun negotiations on a new gaming compact. If they do not, the department will announce its ruling on whether Turning Stone can be allowed to remain open by June 14, the Times Union of Albany first reported in the March 20 editions.

Jensen said compact negotiations with the Oneidas should be concluded and a compact submitted for department review no later than Oct. 1.

Spitzer spokesman Christine Pritchard said the letter was under review.

The compact is just one of many unresolved issues between the state and various Indian tribes.

The collection of cigarette taxes has been a subject of contention for years. An attempt to collect the money resulted in violence in the 1990s when tribes moved to protect their sovereignty. Many non-Indian businesses located near Indian reservations have complained for years they have lost business to the tribes because the Indians do not impose the steep taxes.

''We're open to the idea of revenue sharing,'' Pritchard said, noting that many other states have reached tax-sharing deals with tribes. She did not immediately know how such an arrangement would work in New York.

The U.S. Supreme Court ruled in 1994 that the state could collect taxes on sales to non-Indians.

Daniel French, a lawyer representing the Cayuga Indian Nation of New York, said his clients have agreed to discuss the sales tax issue.

''The nation welcomes the opportunity to sit down and discuss these issues with the governor,'' he said.

Martin Seneca, counsel to Seneca President Maurice John, said that while the tribe was ''very willing'' to hold talks with Spitzer, it did not want to agree to preconditions in doing so.

He said Spitzer had insisted the tribe agree to revenue sharing as a condition to hold talks. ''We very much want to talk to the governor, but we want it to be an unencumbered conversation,'' Seneca said.

In January, a judge ruled that a state law intended to make non-Indians pay tax on cigarettes they buy from Indian retailers is not in effect because New York has yet to come up with a way to implement it. The law has been a source of confusion since it went on the books last March.

Spitzer said in January that he would direct his tax department to implement the law to comply with the judge's ruling.

The collection of cigarette taxes would add an estimated $139 million to state coffers annually, Budget Division spokesman Jeffrey Gordon said. The collection of taxes on sales of gasoline to non-Indians would bring that number up to $200 million.

Meanwhile, Spitzer and Oneida Representative Ray Halbritter met on March 19. Oneida spokesman Mark Emery said the meeting included general talks over unresolved issues, including the tribe's land claim, Turning Stone's operation and taxation.

''They expressed a desire to negotiate and a belief that issues can be resolved,'' Emery said. ''Leadership is about bringing sides together, not just taking sides. Seeking solutions to these issues is what leaders do.''

Last year, the state's highest court, the Court of Appeals, let a lower court decision stand that declared the tribe's casino is operating illegally. Lower courts had ruled Gov. Mario Cuomo exceeded his authority by entering into the 1993 compact with the Oneidas without legislative approval. The casino has continued to operate.

Turning Stone, which attracts millions of visitors a year, includes five golf courses, three luxury hotels and a convention center. The resort employs more than 3,500 people.

The Cuomo administration granted the Oneidas a compact that does not require the tribe to share any gambling revenues with the state. The other two tribes with compacts, the Mohawks and the Senecas, provide a cut of slot machine revenue to the state.

A recent state report found the Oneidas turned a profit of more than $115 million last year from their casino and other businesses.