ALBANY, N.Y. – Facing a severe budgetary crisis, Governor George Pataki, R-N.Y., is balancing between his state’s fiscal needs and the realities of Indian sovereignty by negotiating with the state’s tribes on a government-to-government basis.

One precedent setting move came on May 12 when Pataki and the St. Regis Mohawk Nation signed a memorandum of understanding. This comprehensive agreement, which still needs trial-by-fire referendum at Akwesasne, would settle the federally recognized tribe’s land claim, give the tribe rights to the first of three authorized casinos in the Catskill region and would employ “price parity” to equalize competition between Indian-owned and non-Indian businesses.

Several states, most recently Washington, have negotiated tax compacts with tribes. But New York could raise the standard by coming to such an all-encompassing agreement with one or more of the tribes whose territories are within its boundaries.

“Everybody wins with this memorandum,” said Ray Cook, spokesman for the St. Regis Mohawks. “It all came together at one time for us. It’s good timing.”

“We held the hard line for several decades, we held it under great pressure,” Cook told Indian Country Today. “We held it to the point that we got the best [deal] we can – [but] we have to deal with the state.”

Democratic Senator Charles Schumer last week announced his support for the memorandum, which still requires a host of approvals from the federal government, the state legislature and the St. Regis Mohawk tribal membership.

Serious reservations have been raised on the devil of details in the deal. The opposition is relatively moderate, revealing a general feeling that it is a good time to negotiate with the state. Nevertheless, long-held suspicions and resentments of the tribal council in the Mohawk community and deep attachments to more ideal land claim settlements could hamper this deal-making.

Price Parity

“Pataki’s approach of trying to conclude a tax agreement with the tribes, I believe, is the smart way to go,” said Eric Facer, a Washington, DC-based attorney who represents a number of tribes around the country. “The model that is most likely to succeed is one where a tribe imposes its own taxes, keeps the revenue, and as a result, prices on the products come up, reducing the competitive advantage of the reservation businesses.”

Price parity is meant to reduce the competitive advantage held by Indian retailers, who do not collect state sales taxes and can thus charge lower prices than non-Indian competitors. Monies collected under price parity provisions are to be used for tribal government purposes, much like state sales taxes are used for state governmental expenditures.

Cook concedes that price parity may not be popular with tribal business owners.

“The businessmen for the most part don’t want to increase payments to anybody – they don’t want to charge more, they don’t want to have to pay the tribe more to do business,” Cook said. “The compromise, and that’s what this agreement represents – a compromise from all sides, is that they’re protected from state legislation. That’s got to be worth something to them.”

Mohawk-owned businesses with less than $2 million in annual sales, a category comprising most of them, would be exempt from price parity. Some observers have wondered if the Mohawk government when taxing its business base, would consider always taxing at less than the state.

Catskill Casino

Perhaps the sweetest part of the deal financially for the Mohawks is the rights to a Catskill casino. The tribe has already inked a seven-year operating agreement with Las Vegas-based Park Place Entertainment and plans its facility at Kutsher’s Sports Academy near Monticello, N.Y. Located some 90 miles from metropolitan New York City, this and the other two as-yet unallocated casinos could prove quite profitable.

The Mohawks will also be able to install slot machines at their existing Akwesasne Casino in Hogansburg. A portion of revenue from the new slots will go into state coffers – one-fifth for the first three years and one-fourth after that. Estimates of annual revenues to the state exceed $100 million. Estimates on income to the tribe from the Catskills and the Akwesasne Casino are in the several hundred million.

“Some people say ‘That’s an infringement on our sovereignty,’” Cook said of the slot revenue payments. “But we’re saying ‘No it’s just good business and negotiation.’ So we have to split some slot revenue with the state. We’re not going to get out of that.”

While core elements of the Mohawk community oppose a casino on any grounds, others worry about administrative issues of transparent accountability and proper use of revenues in tribal matters.

Land Claim

The deal would provide the tribe with $100 million so that it may acquire some 7,000 acres from willing sellers in specified areas adjacent to tribe’s current reservation in northern New York. Two islands in the St. Lawrence River would be returned to the tribe by the New York Power Authority, as would some 95 acres of shoreline near Massena, N.Y.

The tribe would contribute $2 million to a community development fund, while state and federal funds would reimburse local governments for lost tax revenue.

The fine detail in this deal is under intense scrutiny. There are questions on whether local town and counties have approval power over some such purchases and potential commercial activity on the new lands.

The Mohawk land claim, as do all such claims, has many stakeholders. Prime Mohawk losses, such as Barnhart Island on the St. Lawrence, have been favored targets for the claim. The two islands offered are far upriver and come with restrictions attached.

Various Mohawk entities, including the residents on the Canadian side of the reservation, represented by the Mohawk Council of Akwesasne (MCA), as well as those Mohawks represented by the traditional council, organized as the Mohawk Nation at Akwesasne, among others, are vying for negotiating power in this deal. All have substantial bases among the Mohawk people, who are historically noted for the organization of protest that can derail state-tribal deals.

Legislative intent

In presenting to legislators such a comprehensive agreement, Pataki is forcing their hand.

“They [the agreements] go back [to the Legislature] as part of a global land-claim settlement, which tactically is the smart way to go because that package won’t be subject to amendment by the legislature,” Facer observed. “It will be previously negotiated with every detail hammered out and the legislature will be put in the position of simply voting it up or voting it down.

A comprehensive deal covering the Catskills, land claims and taxes “might be less of a bitter pill for some of these folks in the Senate and the Assembly to swallow if they realize it’s part of a global settlement and that it’s a good settlement for the state,” Facer reasoned.

“If cooler heads prevail and people reflect carefully on the various legal issues and the politics, I think they’re going to realize that a half loaf or even a quarter loaf is the best you’re going to do when you deal with the tribes on these particular issues,” Facer concluded.

Pataki’s efforts at a broad settlement contrast starkly with legislative intent. On May 2 legislators released their proposed budget, which requires state collection of sales taxes on all products (in addition to fuel and tobacco) to non-Indians. Projected revenue for 2003 is $164 million and perhaps double that in 2004. Pataki vowed a veto, which he delivered on May 14 while vetoing a total of 119 legislative budget bills. Legislators promise an override.

After several months of tax collection attempts at New York reservations were marred by violence and highway closures, Pataki wisely decided in May 1997 to suspend such efforts. Facer predicted that a renewed attempt to tax reservation transactions would wind up “mired in the court system, which accomplishes nothing.”

“Whereas, if you work with the tribes on a government-to-government basis and you conclude an agreement that both sides are willing to abide by, then you have a genuine solution to a problem that has been vexing the tribes and the state for many years,” Facer said.

Negotiations with the Oneida Indian Nation for a similar comprehensive deal are in progress.