The U.S. government created tribal annexation to get poor tribes off the welfare rolls, not to get rich tribes off the tax rolls.

Supervisor Doreen Farr’s recent commentary disclosing the staggering public cost of the Chumash tribal government’s request to annex Camp 4 was a real eye-opener.

Using conservative assumptions, and assuming no second casino, Camp 4 annexation could cost the public more than $1 billion in the first 50 years of a deal that lasts forever.
This annexation request is in addition to the financial advantages this 143-member tribe has already received, which include:
• A monopoly on a casino complex earning an estimated $150 million per year in net profits — about $1 million per year per tribal member.
• An estimated $120 million of state and local tax breaks on the casino and hotel activities over the past 10 years.
• Perpetual tax breaks for existing on-reservation activities, which are projected to be an additional $1.5 billion over just the next 50 years.
That’s a lot of special treatment.
The cost problem is that all development creates demand for government services, such as schools, public safety, roads and social services for those in need. To recover the cost of providing these services, local governments rely on various taxes.
Under federal Indian law, however, state and local taxes are waived for tribal reservations while local governments remain obligated to provide services. As these unfunded demands for services rise, the only realistic budget-balancing option for cash-strapped local governments is to cut services for others.
Since the less fortunate are the primary beneficiaries of government services, the ironic result is that these tax breaks for the richest 1 percent in our community come primarily at the expense of our schools and those who can afford it the least.
The tribe doesn’t need any more subsidies, and the public can’t afford to give them any.
Since the tribe does not publish financial statements, this analysis is based on available tribal documents, newspaper reports, other reliable sources and good-faith estimates.
If the tribe wishes to dispute these figures, publishing audited financial statements for the casino-hotel complex would be a reasonable starting point, and would be a welcome and valuable addition to public discussion.
For readers who enjoy numbers, the calculations are as follows:
Unlike all others receiving the benefits of U.S. citizenship, tribal members and businesses on reservations are exempt from state income taxes. For just the existing casino-hotel operations, the cost to the state in lost income taxes — net of tribal contributions to the Special Distribution Fund — is about $15 million per year.
Therefore, the 10-year cumulative cost is $150 million and, assuming only 2 percent inflation, the 50-year cost to the state will be more than $1.4 billion.
Property taxes are waived on reservations. The cost of the hotel-casino development was reported at $177 million. Under Proposition 13, the first-year property tax would have been $2.1 million. The 10-year property tax subsidy is $24 million. The 50-year cost will be $141 million.
Also waived on reservations is the 10-percent transient occupancy tax charged on hotel room rentals. For a 106-room hotel, with an average room rate of $200 and an occupancy rate of 70 percent, the first year’s waived taxes are $540,000. Assuming only 2-percent inflation, the 10-year cumulative is about $6 million, and the 50-year cumulative is about $36 million.
In addition to the tax breaks analyzed here, very significant sales taxes and impact fees are also waived for businesses on an Indian reservation.
 
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Community Matters explores local topics of public interest. Retired businessman Bob Field is president of his neighborhood’s mutual water company and past chairman of the Valley Plan Advisory Committee.