Judge Agrees With Rincon Band: Governor Schwarzenegger Is Charging an Illegal Tax and Compacting in Bad Faith. Orders a Compact to Be Negotiated in 60 Days.

RINCON, Calif., May 2 /PRNewswire/ -- A San Diego federal district court magistrate has found the Schwarzenegger administration's demands for large payments by the Rincon Band of Luiseno Indians to the state's general fund, in return for a gaming compact amendment that allows the tribe to add additional slot machines, to be an illegal tax in violation of federal law.

Judge William McCurrine Jr. found that the state was negotiating in bad faith and awarded remedies under the federal Indian Gaming Regulatory Act (IGRA), which governs the Class III compacting rules between tribes and states. Judge McCurrine has ordered that the parties reach an agreement within the next 60 days, and if the tribe and state fail to reach agreement each side will submit their best offer to a court-appointed mediator. The mediator will choose the offer that most closely conforms to the court's findings and IGRA.

"This is an incredibly important decision and one that potentially changes the whole landscape of tribal and state gaming negotiations," said Bo Mazzetti, vice chairman of the Rincon Tribal Council. "'Bad faith' has haunted California tribal negotiations with the state since 1991 under then-Governor Pete Wilson, who refused to negotiate regardless of federal mandates. Until this decision, the courts have not enforced it, and not until this case has the benchmark been established for fair and legally negotiated fees versus an illegal tax on tribal gaming revenues."

Mazzetti emphasized that the Rincon Tribal Council is looking forward to working with the governor's office in the next 60 days to produce a compact that complies with federal law, provides for local mitigations, participates in the public safety and environmental concerns of neighbors, and continues to support an improved quality of life in all of California's tribal communities.

"This case means a great deal, not just to Rincon, but all tribes because it confirms one of the basic foundations between American Indian tribes and states: Indian tribes are sovereign governments, which, like other governments, may not be taxed. The judge makes it clear that federal law, specifically IGRA, prevents states from using compact negotiations to assess a tax on tribal government gaming revenues," he added.

In his April 29, 2008 decision, Judge McCurrine points out that tribal government gaming was meant to benefit tribal governments and aid tribal economic development, not to balance state budgets. "Compact negotiations," he reminded the state, "are between equal sovereigns and fees paid under the terms of a Tribal-State Compact are only to be used to mitigate impacts, protect public safety and to establish a framework of the regulation of gaming with the tribes."

The level of taxation that the state was demanding to amend their compact would have amounted to 79 percent of the Harrah's Rincon Casino profits.

"That's not right and it's not fair. No taxpayer would stand to have over two thirds of their income taken by the state. There would be a Sacramento Tea Party," said Mazzetti, adding, "Throughout history, some people have had the opinion that fair doesn't apply to tribes. However, Rincon has honored its agreement with the state and is willing to pay our fair share, but we have opposed revenue sharing that exceeds what is allowed under federal law or that goes for impermissible purposes."

Rincon's immediate goal remains to add 400 machines to the existing 1600 gaming devices to reach the 2,000 maximum promised in the 1999 Tribal State Compact. The tribe has repeatedly refused to accept a compact that does not respect the mutual agreements and terms of the promised 2,000-machine allowance. "The 1999 compact is a legal document. It's still binding and cannot be swept under the Sacramento carpet because the state's fiscal circumstances have changed," explained Mazzetti.

"Additionally, Rincon recognizes that to add machines beyond the 2,000 limit will require new terms, but terms that meet the requirements of IGRA and good faith negotiations."

"How many times, and in how many ways must tribes prove that we are governments before people hear and respect what this means? How often must we spend our precious resources to protect this constitutional status and our right to govern our own lands?" Stephanie Spencer, Rincon tribal council member asked.

"Indian gaming was meant to assure that tribes become self-reliant and would no longer have to beg for handouts from the federal government, the state or taxpayers. To stand on our own feet and to generate the revenues that allow us to do for our communities what taxpayers take for granted from their local governments is what we sought to validate in this lawsuit. It's what we want for all tribal governments," she explained.

"To this end," Mazzetti added, "We have requested that the governor's office commence negotiations in earnest to achieve the goals of the Indian Gaming Regulatory Act and the wishes of the citizens of California when they amended the state constitution to allow casino gaming on tribal lands. If this administration chooses, instead, to oppose us legally, we will continue to fight for tribal sovereignty."

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Source: Rincon Band of Luiseno Indians

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2008-05-02 19:22:44 0351856 PRNEWSWIRE