A new agreement between the state and five Indian tribes promises to give local governments far greater oversight of casino development projects than ever before.
The agreement was part of a state budget package that had yet to be ratified as CP&DR went to press. Other parts of the budget package included a deal between Gov. Arnold Schwarzenegger and local governments that promised a two-year shift of money from local governments to the state in exchange for a constitutional amendment that would prohibit future shifts.
While the state-local financing portion of the budget was stalled in the Legislature, it appeared likely that state lawmakers would approve the new compact with the Indian tribes. The new agreement with the tribes would benefit local governments in several ways.
First, the tribes agreed to finance a $1 billion bond. The state will receive the bond proceeds almost immediately to pay for transportation projects that were in the suspended Traffic Congestion Relief Program.
Second, and maybe more importantly for local agencies, the tribes agreed to prepare a “tribal environmental impact report” (TEIR) before undertaking any project on Indians land that would serve gambling activities and that may have a direct or indirect impact on the off-reservation environment. Based on a TEIR, a tribe must negotiate with affected communities regarding mitigation and public service responsibilities, according to an analysis by the California State Association of Counties (CSAC). If the parties do not reach an agreement, an arbitrator would take up the matter. If a resolution still is not reached, the government could take the tribe to court. The Tribes also agreed to abide by the California Building Code and Public Safety Code, to allow state inspectors to check new construction, and to permit the state to prohibit occupancy of unsafe buildings, according to the governor’s office.
Under the 1999 compact that Gov. Gray Davis negotiated with tribes, local governments essentially had no say at all over casino projects (see CP&DR, July 2003, July 2000).
“From our perspective, it [the new agreement] addresses all the deficiencies in the 1999 agreement,” said DeAnn Baker, a lobbyist for CSAC. “It’s everything we asked for. Unfortunately, it’s only five tribes.”
Those five tribes are the Pala Band of Mission Indians, the Pauma Band of Luiseno Indians and the Viejas Band of Kumeyaay Indians, all based in San Diego County, the Rumsey Band of Wintun Indians, who have a reservation in Yolo County, and the United Auburn Indian Community, which has a casino near Roseville. In exchange for the concessions, those five tribes may expand beyond the limit of 2,000 slot machines. The tribes also get exclusivity on Nevada-style gambling through 2030.
Gov. Schwarzenegger said the compact “begins a new financial partnership” between the tribes, communities and the state.
Whether other tribes will sign similar compacts is uncertain. The sticking point for other tribes appears to be sovereignty, which the new agreements compromise. Also, approval of either of two gambling initiatives on the November ballot will void the compacts.
Still, CSAC estimates that 13 other tribes already have 2,000 slot machines and about 10 others have at least 1,500 slots — and it appears the only way these tribes may expand is by signing similar agreements with the Schwarzenegger administration. “We’re happy with the precedent the new agreement sets,” Baker said.
The local-state finance portion of the budget was locked up because a number of legislators from both parties — led by Assemblyman Darrell Steinberg (D-Sacramento) — were holding out for broader reform. They wanted to provide cities and counties larger shares of property taxes so that local officials would look more favorably at housing development in comparison with sales tax-generating retail development.
The holdouts had Legislative Analyst Elizabeth Hill on their side. Hill reported that the deal Schwarzenegger cut with CSAC, the League of California Cities, the California Redevelopment Association and the California Special Districts Association “locks in place the current flawed state-local fiscal structure, imposes added fiscal stress on many local governments and is not structured in a fashion that addresses long-term state fiscal goals.” Under the deal, which includes a proposed constitutional amendment, only voters could approve substantial changes to the state-local funding system.
Fred Silva, an analyst at the Public Policy Institute of California and former consultant to the Legislature, said the budget negotiations opened the window to real reform. But Silva said he was pessimistic that anything substantial would come of the process.
“If you can’t do it [reform] here, at a time like this, then you can’t do it,” Silva said.
The local government entities that negotiated the deal, however, continued to lobby for it. “The local government agreement does not ‘lock in’ a flawed system,” CRA Executive Director John Shirey protested in a June 28 memorandum to members. “It will provide substantial protection to local governments, protect existing and the new property taxes received in exchange for VLF [Vehicle License Fees] and allow future reforms with voter approval.”
Broader reform is not possible until local entities have revenue guarantees, the local government representatives contended.