Revenue falls short of expectations; Governor's office calls report 'misleading'

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SACRAMENTO, Calif. According to a recent press report, revenue from the
first five amended compacts negotiated by the Schwarzenegger administration
one year ago has fallen far short of its goal.

However, the administration claims the reported revenue shortfall figures
are misleading, and a prominent tribal attorney claims the tribes are
paying as expected.

A report in the San Francisco Chronicle claims that only $18 million was
collected by the state thus far on those compacts. At the time of the
signings last June, Gov. Arnold Schwarzenegger promised that the compacts
would generate $150 - $200 million in revenue for the state. That amounts
to somewhere between 9 and 12 percent of the expected revenue.

"The press reports are completely false," said attorney Howard Dickstein,
who represented the five tribes that signed the compacts with
Schwarzenegger last year.

Dickstein said the tribes have already paid over $90 million in the first
three quarterly payments and that the payments from individual tribes that
have paid into the compacts already top the $18 million amount reportedly
paid to the state.

Among the tribes that signed the first Schwarzenegger-negotiated compacts
are the Pala Band of Mission Indians, whose payments, according to
Dickstein, have already topped $22 million. Furthermore, Dickstein claimed
that the United Auburn Indian Community and the Rumsey Band of Wintun
Indians have made payments of $40 million and $30 million to the state,
respectively.

The payments, said Dickstein, have been made since September and are done
on a quarterly basis.

Both Dickstein and Schwarzenegger spokesman Vince Sollitto pointed out that
the money is actually paid into two funds. One of these funds is meant to
pay off a transportation bond that was essentially floated on the backing
of the tribal payments, although the bond is still locked up as a result of
litigation.

The second revenue stream, based on tribal expansion beyond 2,000 gaming
machines, is to be paid into the state's general fund. It is this fund that
is supposed to generate $150 - $200 million. Money is paid on a sliding
scale that can reach up to $25,000 per machine at the higher end.

Though he acknowledged that the $18 million payment into the state's
general fund thus far is more or less correct, Sollitto also claimed that
the governor's office never said that the $150 - $200 million in the
general fund would be available immediately. That money, claimed Sollitto,
will only be available after the tribes in question expand their
operations, which had not yet occurred.

Schwarzenegger's June 2004 press release announcing the agreements seemed
to include a qualifier on the amount. The passage dealing with the
nontransportation bond revenue read: "This agreement can generate up to
another $150 - $200 million a year in ongoing state revenue, which is good
for California."

The transportation bond which the compacted tribes will be paying off over
the next few decades, meanwhile, has been held up because of a lawsuit
filed by a group of horse racetrack operators who filed suit to prevent the
Schwarzenegger compacts from going into effect. While that was dismissed in
late May, other litigation is still pending.