Help From Tribes No Done Deal

Negotiations between the Davis administration and Indian tribes over how much gambling revenue those tribes should pay the state have slowed to a crawl, threatening to deepen California’s budget shortfall, according to tribal representatives involved in the talks.

As a result, it now appears increasingly unlikely that Gov. Gray Davis will realize his goal of adding $680 million annually to the state treasury for the fiscal year that begins July 1, the representatives said.

The failure to collect that money would increase California’s $38.2-billion budget shortfall at a time when negotiations to close the gap are deadlocked.

Midnight tonight is the constitutional deadline for the Legislature to pass a budget, but lawmakers instead headed home for the weekend, conceding that their differences made it impossible to deliver the spending plan on time.

“The governor thinks he can raise more revenue” from Indian casinos, “so you’d think there would be some urgency,” said Howard Dickstein, who represents seven tribes negotiating with the Davis administration. “I detect no urgency.”

The talks also may illustrate how the signature-gathering campaign to recall the governor is affecting his actions. Some tribal officials and political observers suggest that he has been inhibited in the negotiations over the state’s compacts with the Indians by fears that alienating the wealthy tribes could prompt them to help fund the recall effort.

Administration officials say the recall attempt has nothing to do with what they describe as the deliberately slow pace of the discussions. The governor’s negotiating team has been meeting not only with tribes, but also with local government officials, citizen groups, legislators, law enforcement, unions and other interested parties, said David Rosenberg, Davis’ senior advisor on Indian gambling.

“We resolved early on that we would subject ourselves to the criticism that now we’re moving too slow,” Rosenberg said. “It’s more important to the governor that the product be a quality product rather than a quick product.”

With California facing a record budget shortfall at a time when the state’s Indian casinos are raking in billions of dollars a year, Davis raised hopes in January of a significant infusion of new money when he announced plans to renegotiate gambling agreements with dozens of tribes. The aim, he said, was to convince the tribes to share an additional $1.5 billion a year with the state and to address local concerns over the environmental impact of Indian casinos.

Under federal law, the tribes are not required to pay state or federal taxes, and the 1999 agreement with the state that regulates Indian gambling provides for no direct payments to the California treasury. Davis administration officials now acknowledge that they erred in not demanding more when they negotiated the agreement, which gives the tribes a monopoly on casino-style gambling in the state. The current talks were intended to correct that.

More than two dozen tribes say they are willing to meet the governor’s demands, adding that they have made specific proposals for how to do so while allowing a modest expansion of Indian gambling. But after nearly three months of negotiations, Davis hasn’t responded to their offers or made a counter-proposal, they say.

Some tribal representatives say the governor seems to have put the talks on the back burner while he concentrates on fighting the ouster effort. With some affluent tribes criticizing the governor’s quest for more casino revenue and openly considering whether to support the recall attempt, his approach to the negotiations is understandable, political analysts said.

“Davis has to be even more careful in dealing with the tribes than under normal circumstances,” said Dan Schnur, a Republican consultant who was communications director for then-Gov. Pete Wilson during the 1990s. “One bad move and he’s going to see Morongo or some other tribe putting $1 million into the recall.”

Rep. Darrell Issa (R-Vista), a gubernatorial hopeful who has become the recall’s main financial backer, has sought the support of tribes for the campaign against Davis.

For now, Indian leaders say they intend to stay on the sidelines of the recall. But they clearly relish the unease they are causing Davis, who recently took time away from the budget debate to attend a groundbreaking for the Morongo tribe’s $250-million casino resort near Palm Springs.

“It’s kind of fun to watch,” said San Manuel tribal chairman Deron Marquez, chuckling.

On Saturday, Issa said he expected Davis to “sell out the state” by striking deals with the Indians in return for their financial support or neutrality in the recall campaign. “The real bribe question is: Is the governor able to open the compact in an honest way or is anything he does now tainted with his desire for money and not the best interest of the people of California?” Issa said in an interview.

The congressman also told a GOP crowd at a party conference outside Santa Barbara that Republicans should unite behind one candidate for governor to boost the chances for victory.

Davis is well aware of the power of the state’s tribes: The rapid growth of their casinos has resulted in tribes becoming one of the largest sources of political contributions in California, pumping more than $120 million into legislative and statewide races and ballot initiatives since 1998. Davis has received at least $1.34 million from various tribes since becoming governor in 1999.

In addition to their backing for allies, some of the tribes have shown a willingness to strike at opponents. In the 2001 race for Los Angeles mayor, for instance, various tribes backed an independent campaign to defeat former Assembly Speaker Antonio Villaraigosa, who had supported organized labor’s attempts to unionize casino workers.

Whatever the reasons, tribal representatives said it is becoming unlikely that Davis will get a deal in time to collect the additional $680 million a year from tribes that he recently projected in his revised 2003-04 budget.

Some people familiar with the talks said the governor has devised a strategy of concentrating first on tribes that are looking to get started in the casino business -- a faction that is seen as more willing to make concessions to the state. They said Davis then plans to use that agreement as a model for rewriting the compacts of tribes already operating casinos.

Davis advisor Rosenberg acknowledged that the governor believes it “should be a priority” to talk with tribes seeking their first gambling agreements. But that doesn’t preclude simultaneous talks with those that already have compacts, he said.

Davis and at least two dozen tribes are seeking to rewrite the 20-year gambling agreements that 61 tribes signed in 1999 after the California Supreme Court struck down Proposition 5, a voter-approved initiative giving Indians the right to create Nevada-style casinos.

At the time, federal authorities were threatening to close some Southland casinos already in operation. Davis and lawmakers were eager to keep tribes happy -- in part because of the Indians’ growing wealth and generous campaign donations.

Davis said the state’s budget surplus at the time made the need for direct payments to the treasury seem unnecessary, although other states make such collections. At the high end, New York collects 18% to 25% of casino revenue from its Seneca tribe, and Connecticut collects 25% from its two tribes. The Legislature approved the 1999 agreements with little debate, and voters endorsed Indian casinos overwhelmingly in another ballot initiative the next spring.

California tribes earn an estimated $5 billion a year in casino revenue. Nationwide, more than 200 Indian casinos, bingo halls and racetracks generated $12.7 billion in gross revenue in 2001, according to the latest figures available from the National Indian Gaming Commission.

In California, the more prosperous tribes gave about $115 million last year to a pair of funds, which breaks down to an estimated average contribution rate of roughly 2% to 4% of their total slot revenue, says the California Gambling Control Commission.

Forty-one tribes donated to a “revenue-sharing trust fund,” which is disbursed to non-gambling tribes and tribes with fewer than 350 slot machines. Twenty-eight paid into a “special distribution fund” designed to address problem gambling and environmental problems associated with the casinos.

Some California tribes said they are willing to give the state an even larger cut in exchange for the right to expand beyond the statewide cap of 55,000 slot machines and 2,000 machines per tribe. “The tribes should be very grateful for what they have and what the voters have given them,” said Paula Lorenzo, tribal chairwoman of the Rumsey Band of Wintun Indians, which operates the Cache Creek Indian Bingo & Casino near Sacramento. “There are some things that we can give back to the state of California.”

With the state clearly in need of the tribal money, some Indian leaders see the recall effort as the culprit.

“It’s forcing the governor into a candidate mode,” said tribal negotiator Dickstein. “He’s protecting against risk and downside. It’s not just this governor, it’s any governor. When you’re running for office, it’s tough for politicians to make firm decisions.”