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States not willing to credit tribes for sharing

Across the nation, more and more states are counting on tribes to bail them out of their budget crises. From California to New York, governors are telling tribes to pay their "fair share."

But it's nearly impossible to find evidence of the trend in a report written by the governors themselves. Even though tribes have been sharing gaming, tobacco and other revenues long before Gov. Arnold Scharzenegger stepped on the scene, few states are willing to admit it.

In fact, the only one giving credit to tribes is Oklahoma. The state is expecting an additional $22.8 million from tribes under new tobacco tax compacts signed this year, according to the National Governors Association.

Yet even the Sooner State omits a significant detail. What about that $71 million that tribes will be contributing under new gaming compacts that were signed this year? An election was fought and won over it.

But that information won't be found in "The Fiscal Survey of States," the 59-page report released by the governors yesterday. It's almost as if 2004 never happened in the eyes of the states.

"The trend is states are trying to balance their budgets on the backs of Indian tribes," Chris Karnes, a lawyer who represents tribes, noted at a forum last month.

What the report does it paint a mixed portrait of the financial status of the 50 states. While revenues are indeed up, the states say they are still struggling to recover from the worst fiscal crisis in the last six decades.

"Are states better off than they were a couple years ago?" asked Raymond C. Scheppach, executive director of the NGA. "Certainly. Are they where they want to be or where they should be? No way, and that is attributable to the rising health care costs."

But anyone who looks at tribal-state relations over the past couple of years would be hard pressed to find the words "health care" mentioned. Instead, what the public heard was that "the Indians are ripping us off" or that tribes pay "essentially" nothing to the state for the right to operate casinos.

The tribal gaming industry points out that is far from the case. According to the National Indian Gaming Association, tribes with casinos contributed $1.7 billion to local and state government last year through revenue sharing, payroll taxes and direct and indirect payments.

"Indian gaming is not a reason for state budget problems and should not be used as a way out," said Ernie Stevens, the chairman of NIGA, at a hearing this past April. "Shifting the burden to tribal governments is not reasonable or fair." s

Tribes in six states signed compacts to share gaming revenues with states. In Connecticut, two tribes donate nearly $400 million every year. In Wisconsin, tribes are expected to share between $100 million and $150 million under new compacts. In Arizona, tribes will contribute $61 million in the coming year to the state.

Even more tribes share tobacco, gasoline and other sales taxes with states. Figures from tobacco revenues alone are estimated to run in the tens and tens of millions. Some states say they are losing out of billions from untaxed tribal tobacco sales.

The future looks even better for some states. In addition to Oklahoma, California and New York are poised to get even more revenues from tribes under casino deals negotiated this year.

But none of this seems to be making a difference, according to the state governors. Their report somberly notes that 15 states made nearly $2.2 billion in cuts to their budgets this year, 38 states cut their budgets by nearly $13.7 billion in 2002 last year and 40 states cut programs by $11.8 billion the year prior.

Several states have legalized slot machines or expanded gaming but only Michigan mentions that it increased a tax on its Detroit casinos. The change is expected to add $49.1 million to the budget.

Get the Report:
The Fiscal Survey of States (December 2004)

Relevant Links:
National Governors Association -