California Has Its Hungry Eye
on Indian Gaming Revenues

Got a budget deficit? Every state does. Got Indian gaming facilities? California and many states do. Can California and other states tap Indian gaming profits as a source of revenue to fix your state budget problem? Not directly, but maybe indirectly they can. It seems that California is thinking about re-opening an old can of worms relating to the taxation of Indian gaming facilities. Currently, states cannot tax Indian tribes, however they can arrange for payments in lieu of taxes and other financial arrangements with tribes.

What might it take to play let's make a deal with tribes in California. According to a recent New York Times article, "in bargaining with the Indians, the state's only leverage is its ability to grant licenses for additional slot machines and other gambling devices. Gambling experts say that to get the $1.5 billion Mr. Davis seeks, the state would have to allow tribal gambling to at least double."

Obviously, other states will be watching the California situation carefully to decide whether they should make similar moves. Once again, California becomes a "test ground" for policy innovation.

What's my take on the situation? I think it makes sense to broach the subject with the California tribes. Hopefully during this "horse trading" there is some discussion of how tribes and the state can work and invest their resources together to stimulate economic development where it's most needed in the state. Maybe this is the time to form a California-Native Nations Development Fund to provide financial support to needy economic development projects in the state. If Governor Gray is intent upon capturing a piece of casino profits, it seems that a reasonable portion of that money should be directed to economic development uses and not simply treated as general revenue funds. How's that for an innovative idea. Are you listening California?