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The Shifting Tide of Economic Policy: Will Indian Country Be Left to Drown?

Ryan D. Dreveskracht
4/7/11

In recent months, the Obama Administration has shifted its focus from stabilizing the economy to creating jobs. In January, Obama created the Council on Jobs and Competitiveness, an advisory board intended to find “new ways to promote growth by investing in American business to encourage hiring, to educate and train our workers to compete globally, and to attract the best jobs and businesses to the United States.” Obama continued this message at his address to the U.S. Chamber of Commerce in February, urging Chamber members to “hire American workers, to support the American economy, and to invest in this nation.”

Where does Indian country fit in all of this? In the upcoming months—when many of federal economic incentives available to businesses locating to or employing the labor of Indian Country will expire—we will surely find out.

Training Grounds

A lot has been gained from gaming. Not only have tribes been able to make up for federal funding shortfalls, invest in tribal culture, rebuild tribal assets, and strengthen tribal governments, but many tribes are now extremely business savvy, particularly when it comes to partnering with non-Indian businesses.

But the forums for these partnerships solely via gaming are slowly coming to an end. Indian gaming—at least as we know it today—will not last not forever.

In 2009, Indian country experienced the first decline in nationwide gross gaming revenues. As states attempt to dig themselves out of a $175 billion budget deficit, efforts to legalize gaming throughout the U.S. are picking up steam. That the leverage offered by Indian gaming will dwindle is not a matter of if, but when.

The time is now for tribes to diversify their business portfolios—for tribes to expand sources of income, minimize commercial risk, and create long-term economic stability for their people. So, how are tribes supposed to attract outside investment to the reservation? More importantly, how are tribes to attract the type of on-the-ground investment that creates jobs for tribal citizens and supports tribal economies?

Business Incentives Unique to Indian Country

Last month, the Seneca Nation of Indians decided to do something proactive by reaching out to Verizon and offering them an “alternative to locating a new data center in tax-intensive western New York: locating it on business-friendly, property tax-free Seneca land.” Seneca did so in response to remarks delivered by Gabe Galanda at RES 2011, to guests of the Department of Interior’s Office of Indian Energy and Economic Development, titled “The Business Case for Attracting Private Investment and Development in Indian Country.”

Unfortunately, however, just as tribes like Seneca and non-Indian businesses like Verizon are beginning to explore the various federally-backed and tribally-created economic incentives to reservation investment and development, some of those incenvtives are in danger of disappearing. Although some incentives are permanent—like tribal immunity from state taxation—others are renewed yearly and are now on the brink of extinction. To name a few:

• Under the BIA’s Guaranteed Loan program, the federal government backs loans to Native American persons or businesses that would otherwise not qualify. FY 2012 funding for the Guaranteed Loan program has been significantly slashed.
• The Indian Employment Tax Credit provides businesses with an incentive to hire individuals who are enrolled members of an Indian tribe and who live on or near an Indian reservation. This program is set to expire December 31, 2011.
• The Work Opportunity Tax Credit provides private sector businesses a tax credit for hiring individuals from target groups that have consistently faced significant barriers to employment. This program is set to expire August 31, 2011.
• Using accelerated depreciation, manufacturers with facilities in Indian country can use shorter recovery periods when calculating depreciation deductions for its production equipment. This program is set to expire December 31, 2011.

The Future of Private Investment in Indian Country

Because many of the incentives offered by partnering with an Indian tribe are permanent, investors need not be entirely apprehensive. That being said, Congressional action is needed to ensure that current incentives are maintained.

Last month, Oklahoma Congressman John Sullivan introduced a bill that would permanently extend the Indian employment credit and depreciation rules.Congressman Sullivan is currently attempting to convince his colleagues in Congress that “[m]aking these tax incentives permanent will not only help to attract new business, but will also allow our existing businesses to plan for the future without the uncertainty of these incentives disappearing year to year.” Given the current political climate in D.C., it”s impossible to predict the reception of Representative Sullivan’s bill.

Unlike other interest groups, the federal government has a trust and treaty obligation to economically enfranchise Indian country. Incentives fulfill part of this obligation by creating investment opportunities, encouraging Indian hiring, training tribal citizens to compete nationally, and attracting jobs and businesses to Indian country. That these goals mesh with the Administration’s current goal for nationwide job creation should not be forgotten as the nation enters into the next step of economic recovery.

Ryan D. Dreveskracht is an attorney licensed in Washington State, where he focuses on issues critical to Indian Country. He can be reached at dreveskrachtlaw@gmail.com or by phone at (360) 430-3783.

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georgenenelson's picture
Interesting views and opinions and something all American Indian governments need to consider.
georgenenelson
gamma's picture
While we need to strongly encourage Indians to start businesses, we need to realize the great danger in the Seneca Nation reaching out to Verizon and non-Indian corporations like that. Corporations and financial interests rule America, indeed much of the world. They're always looking to expand their control and Indian country is prime target. Corporations wage pointless wars that kill millions only to further their interests, using democracies as a front. If we provide incentives for non-Indian businesses to enter Indian country, we are prepping ourselves to be ruled and controlled by them. Say goodbye to real sovereignty more quickly - not to mention other problems like environmental damage, destruction of our lands, uncontrollable construction, corruption/bribes, etc. Do we want these things to happen in Indian country? Collectively, Indian nations need to stop depending on the Fed for support (money, benefits, etc) and ratification (federal recognition). Individually, we Indians need to stop depending on our leaders. We need to go back to basics. We need to do what our forefathers did. We lived off buffalo. We can do something similar now. We can be self sufficient. You can get seeds for free. Each person needs to sow seeds. We need to grow our own crops. Somewhere down the line, we have been brainwashed to grow lawns instead of fruit trees and crops. My neighbors who have fruit trees are ashamed to pick up fruits that have fallen to the ground and let them rot. Get over such brainwashing. With backyard farming, every tribal person can be virtually self sufficient. You can buy chicks for a dollar each. Chicken live off even sawdust. Keep chicken and you get eggs every day. Pigs reproduce like crazy and provide meat. You can buy lamb for less than $100. The Navajo elders keep sheep. The rest of us need to keep sheep too. Sheep live off almost nothing. Those of us who can afford it can keep buffalo or cattle. We can be completely self sufficient with backyard farming. Then further ourselves with adequate education in the right areas (e.g. tribal law, financial engineering, etc) or acquiring the right skills (e.g. useful trade skills like building and repairing homes, etc). Within a generation or two, we're back on our feet. So while tribes need to stop depending on the Fed and non-Indian sources, tribal members need to stop depending on the tribe and our leaders. Just be self sufficient. Seriously, start sowing seed, keeping a few chicks and some sheep. I feel the need to go to Walmart only to buy seasonings a couple times a year. Otherwise I am self sufficient.
gamma