Patrice H Kunesh, JD MPA
The world is reeling from an unprecedented global economic shock brought on by the sudden onset and rapid spread of the highly infectious COVID-19 (SARS-CoV-2) virus.
In Indian Country, tribal leaders have stepped up to protect their communities by closing casinos and related businesses (such as hotels and convenience stores). For tribal leaders, though, combatting the virus comes at a severe cost. Tribal governments are both the providers of essential services to tribal citizens and major employers of thousands of people.
Closing casinos not only shuts down reservation economies and disrupts the social fabric of Native families, the shock will shake the future financial stability of many Native communities. Moreover, given the slow fuse of COVID-19, we’ll likely see more economic and social damage to our already vulnerable communities.
The crucible of this crisis is the opportunity to forge stronger and effective social institutions. As Indian Country recovers from the pandemic, it will need to adjust to a society profoundly altered by COVID-19. No matter what, this adjustment will test the resilience of even the most well-administered tribal governments.
To surmount a future fraught with financial challenges and restore its social fabric, Indian Country must address three key challenges: economic diversification, balanced self-governance, and inclusive prosperity.
This matters greatly because Indian Country is a distinctively important component of the U.S. economy and a significant contributor to state economies. Two hundred forty-five tribal governments operate 500+ gaming enterprises in 29 states. Tribal government gaming has experienced tremendous revenue growth in the past 30 years and currently is a $37 billion industry.
According to the Harvard Project on American Indian Economic Development, tribal governments generate extensive gaming and non-gaming economic impacts and benefits well beyond the reservation borders with over $100 billion in outputs (the value of sales and services reflecting an extensive supply chain network). Collectively tribes are the 13 largest employer nationwide, employing more than 1.1 million jobs, paying out more than $35 billion in wages and benefits. In addition, tribal governments pay over $20 billion in taxes and direct payments to federal, state, and local governments through revenue sharing agreements.
Tribal government gaming allowed tribes to return revenues to their communities through essential government services. These include reservation infrastructure from roads to broadband, support social and economic programs and services such as health care, education, housing, public safety, and youth and elder care programs. With a steady improvement in revenues, Indian Country per capita income has increased substantially from 1990 to 2020: about 48%, compared to 9% growth for all Americans.
Tribal governments also use gaming revenue to make significant payments to states and local governments, who rely on those funds to support their own essential services. Facing the loss of $20 billion in tribal revenue payments is no trivial matter. Suspending those obligations while the casinos are shut down is an obvious necessity (a rare triggering of the “Act of God” provisions), but also must be considered for a period of time once casinos are re-opened.
To forestall further damage and re-establish a sustained stream of government revenue and per capita income, it is imperative that tribal governments pursue three changes to their current business and governance models.
The first change is to diversify reservation employment opportunities. While gaming has boosted reservation economies and provided vast number of employment opportunities, these jobs are too often highly concentrated in just two sectors - public administration and gaming-related businesses. Compared to nearby county areas, reservations overall have significantly fewer workplaces per resident and slightly more jobs per resident due to a workforce concentrated in government and casino-related jobs.
This glaring imbalance and over-dependence on a narrow range of employers creates high vulnerability to economic and social shocks. Indian Country experienced similar exposure during the 9-11 attacks and the 2008 Great Recession, but most survived by recalibrating their operations and restructuring their debt. This recovery will be different, however. Indian Country’s response to these changes requires effective leadership and a commitment to an inclusive economic revival.
The gaming market today already is saturated and likely will shrink dramatically, at least during a protracted period of recovery and recession. Moving gaming to an on-line platform might save a pocket of business, but it would be much less lucrative and would require a much smaller physical and workforce footprint. With the biggest benefits being derived from jobs and paychecks, it behooves tribes to implement a robust economic diversification strategy incorporating these essential features:
• Expanding the number and type of tribal business interests, beyond the gaming/entertainment and public administration sectors
• Creating a positive climate for private business development that includes a collateralized lending system
• Developing bonding capacity and a strong public finance posture for much needed infrastructure enhancements such as roads and broadband service
• Establishing tribal administrative capacity to directly interface with state and federal agencies and philanthropic institutions and avail the tribe of many rich and diverse funding sources
• Using trust lands efficiently for both business and community needs such as housing
In addition to pursuing economic security, tribes should ensure equality of opportunity within their own institutions and reliable delivery of public services. For decades now, tribes have valiantly pursued self-governance despite historical and current severe underfunding for basic services, including education, health care, public safety, food, and housing. Post-pandemic tribal governments must smooth out of the delivery of trust services and allocation of responsibilities with the Bureau of Indian Affairs.
For example, wherever possible tribes should assume responsibility for land use and development. Their ability to control and manage the leasing process of trust lands efficiently will greatly enhance their ability to develop and expand their economies.
As tribal governments were shutting down casinos, their primary and often sole source of income, they requested federal aid to help them address the severe consequences of the pandemic in their communities. Congress responded with a $8 billion set aside for tribes in the enormous $2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES Act).
Now, tribes must be able to readily access those federal funds and available state funds, and maneuver policy hurdles to put those funds to maximize use. They must be agile and responsive, with administrative systems in place to capture resources and deploy them to the highest and best use quickly.
Third, tribes must create an environment for more inclusive prosperity. Economic shocks and recession make people much worse off. In Indian Country, tribes have always had far fewer resources. Now, in addition to containing the virus, tribes also are battling even more difficult issues of food scarcity, housing instability, and income insecurity. In the midst of relief “triage,” however, tribes must take care to lift up those most at risk, both now and over time.
This also means recognizing that business enterprise and social welfare are two sides of the larger issue. The work here will involve deep investments in enhanced educational opportunities from birth to adulthood, with an emphasis on quality early childhood development and workforce training. Moreover, embedded in this approach is the pursuit of structural changes and pathways to economic opportunities and resources. Overall economic and social life will be radically more equal for Native peoples.
So what do tribes do now?
They have to start talking and thinking about tomorrow, making it a priority to restore the social and cultural fabric of their communities. Tool that will be necessary for this restoration project include diversifying highly concentrated business structures, recalibrating self-governance to optimize sovereign authorities, and maintain a robust safety net that protects against hardships resulting from exposure to colonialism and the global market place – in short, a more inclusive prosperity.
Of Standing Rock Lakota descent, Patrice is a nationally recognized thought leader and advocate, well known for influencing, inspiring, and equipping cross-sector leaders to create inclusive economic systems and thriving societies, particularly with Native communities. Kunesh is the founder and director of Peȟíŋ Haha Consulting, a social enterprise committed to building more engaged and powerful Native communities by expanding assets, fostering social and human capital, strengthening capacity, and pursuing economic equity through research and advocacy.