Shinnecock Indian Nation

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Under Fire Over Revenue
Republicans say Pataki wasted opportunity to close budget gaps by not collecting $1B in gas and tobacco taxes from Indian reservations
April 28, 2004
BY DIONNE SEARCEY
ALBANY BUREAU; Albany Bureau researcher Andrea Baker contributed to this story.

ALBANY - Senate Republicans accused Gov. George Pataki's administration yesterday of squandering nearly $1 billion in uncollected revenue from tobacco and gas taxes on Indian reservations.

Traditionally allies of the Republican governor, the lawmakers said that by flouting the legislature's order last year to collect the taxes, Pataki had lost a critical opportunity to help plug the state's giant budget hole and increase funding for schools.

"This is money we're entitled to get," said state Sen. Nicholas Spano (R-Yonkers), who is pushing a bill to force Pataki to collect the money. Spano's tax committee released a 43-page report detailing the extent of the losses.

Nearly a month into the new fiscal year, budget negotiations are still deadlocked, with legislators passing $14.5 billion for emergency spending in the meantime.

Cigarette and gas taxes from tribes were supposed to start flowing into the state's coffers as of Dec. 1, and lawmakers used the anticipated money in the budget they passed despite Pataki's objections last year.

But in January the governor ordered the Department of Taxation and Finance to delay collections until March of next year, to give him time to negotiate tribal agreements that would allow Indians to retain some competitive edge while raising their prices close to those of nontribal retailers.

"These are complex negotiations, and the state wants to deal with tribes in good faith through cooperation, not confrontation," said tax department spokesman Thomas Bergin.

The tribes have long resisted paying the taxes, citing their sovereignty, and in 1992 the Seneca Nation violently opposed a similar effort. Seneca President Rickey Armstrong said yesterday the collections would devastate his tribe's economy and undermine an 1842 treaty. Lance Gumbs, chairman of the Shinnecock Tribe, said: "We will not pay those taxes. We will do whatever it takes to maintain our sovereignty."

Both Republicans and Democrats, however, have urged the governor to adhere to the law. Spano and Assemb. Bill Magee (D-Nelson) are sponsoring bills to strip Pataki's tax commission of the ability to continue delaying. The measures would require the state to collect taxes from distributors before tobacco and fuel go to Indian businesses.

"We want to make sure goods sold to natives on native land remain tax free," Spano said, "but non-natives have to pay up."