Capitol Alert
By Jim Miller
September 6, 2015

  • Several tribal-state agreements in mid-2000’s included money for state
  • Court decision deemed such payments illegal taxation
  • Tribes happier with Jerry Brown than they were with Arnold Schwarzenegger

Former Gov. Arnold Schwarzenegger, beginning with the recall campaign and on through his two terms in office, repeatedly linked the state’s tribal casino business to state finances.

“We want to have the Indian gaming tribes pay their fair share to the state,” Schwarzenegger said during a 2004 news conference, “and it looks like we are on that road.”

Today, tribal money is moving in a different direction. A key court decision, a switch in governors and changing casino economics mean that tribal payments to the state’s general fund – which totaled $241 million last year – are beginning to shift elsewhere.

Gov. Jerry Brown and the United Auburn Indian Community, which runs one of the country’s most profitable casinos, last month announced an overhaul of the tribe’s 2004 agreement with the state. It reduces by nearly two-thirds what the tribe pays into the general fund and directs much of the money to local projects and poor tribes. Lawmakers ratified the agreement last week without a dissenting vote.

The federal Indian Gaming Regulatory Act, passed in 1988, set rules for the operation and regulation of casinos on Indian lands.

Other successful tribes making significant payments to the state also are rumored to be interested in talking new terms with Brown, who is seen in a much more positive light by tribes than his predecessor.

The Morongo Band of Mission Indians in Riverside County, which renegotiated its casino agreement in 2006, “hopes to have an opportunity to discuss our compact with the governor soon,” Robert Martin, the tribal chairman, said in a statement last week, noting that “the economy has changed dramatically since 2006.”

The state is required to negotiate casino agreements with tribes under federal law. Beyond finances, the deals address issues such as environmental protections, patron safety and labor relations.

Brown administration officials say the governor seeks to craft pacts good for the state and individual tribes, but note that new rules have been put in place since Schwarzenegger was governor.

“Federal courts have restricted the state’s ability to require tribes to pay into the general fund,” Brown spokeswoman Deborah Hoffman said. “We will negotiate within the framework of federal law to reach terms that further the interests of tribes and their members, the surrounding community and the California public.”

California voters have liked the idea of making money for the state from gambling on Indian reservations, if election results are any indication.

They overwhelmingly rejected a 2004 tribal casino ballot measure, Proposition 70, after opponents, including Schwarzenegger, claimed it would short the state. Four years later, voters upheld casino-expansion agreements with the Morongo tribe and three other Southern California tribes after a campaign in which proponents played to voters’ concerns about the state budget.

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