Business | Opinion

Editorial: Empowerment zone slips away on Pine Ridge Reservation

Friday, May 6, 2016

Empowerment Zone: A golden opportunity that slipped away
By Native Sun News Editorial Board
www.nsweekly.com

In 1999 President Bill Clinton issued an Empowerment Zone authorization to the Oglala Sioux Tribe and then initially funded it to the tune of $10 million dollars to be expended over a 10 year period. How did that work out?

How many new businesses provided permanent jobs to the chronically unemployed people of the poorest county in America?

First off, an Empowerment Zone is an economically distressed area that is supposed to receive tax incentives and grants from the federal government. The main idea of the Zone is to use tax incentives to encourage business investment, improve employment opportunities, and stimulate economic growth. Offering major corporations a tax incentive to move businesses to the reservation is one of the major goals for having an Empowerment Zone.

In other words the Empowerment Zone director should have pursued Microsoft or Google to establish a portion of their business operations in Pine Ridge to create a place that would employ several hundred Lakota workers by offering the businesses tax incentives they could find nowhere else. The opportunity to do this was there.

It was an opportunity to turn the economy of Pine Ridge into something great. It never happened because of the lack of leadership. It was who the Tribe hired to run the operation that resulted in failure.

When the Oglala Sioux Tribe hires someone to lead them in building an economic base to develop businesses on the reservation here are a few things they should ask the person they intend to hire:

Have you ever owned or operated a business? How many people did you employ?
How did you get the money to fund the startup of the business?
Was the business a corporation or a sole proprietorship? When you owned the business did you ever pay a corporate, payroll or capital gains tax?
Was your business a for-profit or non-profit business? If it was for-profit do you have a Profit and Loss Statement (P&L) we can look at? You must have paid taxes on the business such as employer’s taxes and in that case you had to file a federal income tax each year. Could we see at least 3 years of your federal taxes?

And if the person being interviewed had a non-profit business, the Tribe should be very cautious about hiring them. We have far too many nonprofit business consultant firms operated by managers who don’t know a thing about running a for-profit business.

The Oglala Sioux Tribe hired former school teachers to operate a multi-million dollar enterprise designed to bring for-profit businesses to the poorest county in America. They had a college degree and that was deemed sufficient. That’s like hiring a teacher to build a bridge across the Missouri River. No bad knocks on teachers, but teaching is what they do, not run million dollar business operations like the EZ.

And finally why didn’t the USDA, the agency funding the Empowerment Zone, do some serious follow-up work, including auditing, to see if the money they poured into the EZ was being used legally, effectively and properly?

Let’s face it: Most of the money from the EZ was given away to cronies and relatives with little or no accounting of where it went. None of it was ever repaid so that the EZ could have a revolving fund to start up other businesses. In the end nearly $17 million dollars went the way of the gooney bird.