Let the games begin: California's budget problems trickle down to Indian country
Not even the nation's most populous state can escape the economic doldrums that face local and state governments around the country. The exorbitant budget deficits of the Reagan years have returned with a renewed vigor; California faces a fiscal deficit that could top $38 billion this year. Not surprisingly, Gov. Gray Davis has turned to Indian gaming to help cover his state's fiscal shortfalls.
On May 14, in presenting a revised budget proposal, Davis announced that he wanted $680 million to be paid by the state's 61 compacted tribal nations. While this is certainly a gigantic chunk of change, Davis' original proposal had the tribes forking over an even more incredible $1.5 billion to the state; he has yet to explain the rationale for either number. Given California's well-documented history of vicious persecution of Indian people, one begins to wonder whether reaching for ever-more exorbitant amounts from the Indian nations could become a fiscal continuation of those dark days.
Indeed, a slice of the Indian gaming pie, generally in the form of slot machine revenue, has become the de facto price of negotiating a state-tribal gaming compact. Many states, recognizing the windfall that Indian casinos can provide, have allowed for their development despite, in some cases, strident opposition. As budget deficits around the country expand, that slice paid to the states could be growing as well.
But California's gaming tribes are already among the nation's most generous. They currently pay into two state-administered funds: One, unique in Indian country, is for the benefit of tribes that conduct minimal or no gaming activity; the other is to pay regulatory costs and to reimburse local governments for other expenses related to the presence of Indian casinos within their jurisdictions.
The formula used to calculate tribal revenue sharing payments involve both one-time licensing fees and annual charges on a sliding scale based upon the number of "gaming devices" in play. The formula for the special distribution fund is based on a percentage of the net win of slot machines, again on a sliding scale, that were in play as of September 1, 1999. Some 19,000 machines are affected.
So, is it safe to say tribes within California pump considerably more into Sacramento's coffers than other Indian nations share within their respective state governments? "Absolutely," said Susan Jensen, spokeswoman for the California Nations Indian Gaming Association.
California tribes also support treatment programs for compulsive gamblers and, according to recent study by the University of Nevada at Las Vegas, compensate their employees with the highest wages and benefits among Indian casinos nationwide. Many tribes have also negotiated or have tried to negotiate payment-in-lieu-of-taxes agreements, or memorandums of understanding, with nearby local governments.
So, it's not that Indian nations are unwilling to fairly share some of their new wealth with their non-Indian neighbors. But, as many people seem to need this reminder, here it is - under the Indian Gaming Regulatory Act of 1988, proceeds from tribal gaming are, first and foremost, to be used for tribal governmental programs and to improve the welfare of the tribe's membership. IGRA did not anticipate that states would try to balance their budgets on the back of Indian gaming.
To be fair, many states face fiscal problems that are not entirely of their own making. Non-funded federal mandates and shrinking tax revenue are just two of the challenges causing governors and state legislatures from coast to coast to scramble for any spare dollars they can find. Indian gaming has become fair game, right in the center of the radar screen.
According to CNIGA, of California's 61 tribal nations with compacts, 51 of them currently operate 52 casinos in that state. In March, Davis initiated renegotiations on the compact terms with a dozen or so tribes, reportedly including the Cabazon Band of Mission Indians and the Agua Caliente Band of Cahuilla Indians, the only tribe with two casinos.
While potentially giving up a larger portion of gaming monies may be distasteful to tribes, could the renegotiations represent an opportunity to extract concessions from the state in return?
"It will be handled on a tribe by tribe basis," Jensen said. "They are very few tribes that need more machines and even fewer who are looking for alternative lands."
So what's in it for the tribes to renegotiate? "That's the question," she replied.
"This is a 20-year agreement and we're almost three years into it. There's nothing [in the compact] forcing the tribes, or the state for that matter, to negotiate," Jensen told Indian Country Today.
She explained that environmental concerns and machine counts are the two specific compact items that can be negotiated, and if both parties agree, other items may be discussed as well.
"There might be tribes out there who want to change [certain compact provisions] and that would be their sovereign right to do so," Jensen said. "Each tribe needs to negotiate their compact for [themselves] and for whatever they feel is appropriate. I believe that's what was intended when Congress passed IGRA."
The fact that Californians generally favor Indian gaming is obvious. In recent years, two Indian gaming propositions have passed statewide referenda in California; 1998's Proposition 5 garnered 63 percent of the favorable vote, while in 1999, Proposition 1A passed with 64 percent. Since both passed during better economic times, it is difficult to imagine that California's voters saw Indian gaming solely as a growing revenue source for the state. It's safe to assume that, while not blind to the ancillary gaming benefits that spill over into surrounding communities, Californians wanted to offer tribes access to the only successful economic development that has ever consistently worked in Indian country, casino gaming.
Now, could California be trying to strong-arm its Indian nations within into helping bail out a state government that in the past has stolen their land, put bounties on their heads and questioned their very legitimacy as indigenous peoples? And this, despite the fact that California tribes already give up more of their gaming proceeds than those within any other U.S. state?
CNIGA, Jensen said, is in the process of measuring the overall impact of Indian gaming on the California economy. Their report will make for some interesting reading when published.