State
May Let Casinos Pay to Grow
Six
tribes are in talks with Schwarzenegger to expand gambling in exchange
for $1 billion to help budget. Initiative campaign moves ahead.
By Dan Morain
April 1, 2004
SACRAMENTO — Gov. Arnold Schwarzenegger is considering granting major
casino expansion rights to a half-dozen California Indian tribes in exchange
for $1 billion or more to help solve the state's budget woes, administration
and tribal representatives said Wednesday.Talks
over the high-stakes deal are not expected to be complete for at least
a month. And though aides to Schwarzenegger expressed optimism that a deal
would be struck, it remained unclear whether the governor would attain
his goal of obtaining more Indian gambling revenue.
There were no signs that other tribes might be interested in such an
agreement. In fact, several successful gambling tribes did not join in
a meeting Wednesday with the Republican governor.And
even as talks proceed between the governor's aides and six of the state's
107 tribes, competing gambling interests — one a casino tribe, the other
a coalition of racetrack and card room operators — are speeding ahead with
plans to place separate initiatives on the November ballot.
After Schwarzenegger met for an hour with representatives of five casino
tribes that are close to agreement, Rob Stutzman,
the governor's communications director, proclaimed Wednesday that the governor
was "very pleased at where the negotiations are at." Stutzman
declined to discuss components of the deal, saying that "there are still
fluid issues.""The governor's request
today," said Stutzman, "was that [parties]
move quickly to close out on those final issues that need to be addressed,
and we're going to have some very good news for some tribes of Other sources familiar with the closed-door talks but speaking on the
condition that they not be identified described
the outlines of the package. Tribes signing onto the deal would gain the
right to unlimited expansion of casinos on their land. Currently, individual
tribes cannot operate more than 2,000 slot machines, the most lucrative
game for any casino owner.In exchange,
the tribes would use their blue chip credit standings to finance a bond
giving the state $1 billion — and perhaps more depending on the number
of tribes that participate — to help solve California's budget woes in
the coming fiscal year. Tribes would pay off the bond, at an aggregate
annual cost of about $100 million, spread over 18 years.
Additionally, tribes would pay a few thousand dollars to up to $25,000
a year for each new slot machine they install. Over time, payments from
the half-dozen tribes involved in the current talks could amount to $500
million a year.Negotiators are haggling
over an array of other issues, such as whether tribes must comply with
state environmental law when they expand their casinos; and whether patrons
would have the right to sue if they are injured on casino property. As
it is, tribes are sovereign entities that do not have to comply with state
law and are immune from lawsuits.
As outlined, the deal appears to give Schwarzenegger more than he had
sought. In his proposed budget, Schwarzenegger had called on the 53 tribes
that operate 54 casinos to pay the state at least $500 million in the coming
fiscal year.Among the participants
in the talks is the United Auburn Indian Community, owners of Other tribes involved in the talks include the Pala
Band of Mission Indians in Urban Gambling
A final tribe involved in the talks — though not represented Wednesday
— is the Lytton Band of Pomo
Indians, which hopes to open a casino in San Pablo, near Oakland and San
Francisco. It would be the first Nevada-style casino in a major urban area
in Several tribes with large casinos walked away from the talks — at least
for now — largely because they consider the proposed payments too rich."We
were never in the group," said David Baron of the Barona
Band of Mission Indians, owners of a large casino outside Tribes reacted then by spending more than $60 million on an initiative
that sought to give them unfettered rights to operate casinos on their
land. The state Supreme Court struck down that measure, leading to the
current deal fashioned by Gov. Gray Davis in 1999.Under
those agreements, the tribes pay into a revenue-sharing fund — $130 million
a year, with most of it going to tribes that have small or no gambling
operations.
Marquez noted, however, that several tribes were content with the "I am not interested in doing things that compromise my government and
my people for the sake for getting more machines," Marquez said. "Unfortunately,
the governor and the governor's people feel and think this is about the
greenback. It is much deeper than that."Backers
of the two competing gambling initiatives said Wednesday that they intended
to press ahead, despite exhortations by Schwarzenegger's aides that they
allow the governor to negotiate the new gambling agreement. They must submit
600,000 valid signatures of registered voters by the middle of April to
place their measures on the November ballot.
Card rooms and racetracks have contributed $3.5 million into a campaign
fund backing their measure, which would require all tribes to pay 25% of
their gambling winnings to state and local governments. If they refuse,
tracks and card rooms would gain the right to 30,000 slot machines and
pay 33% of their winnings mainly to state law enforcement, fire and education-related
programs.
"It is important that the governor continue to strive for 25%," said
Greg Larsen, spokesman for the initiative pushed by card rooms and racetracks.
"That is what we believe the fair share should be."At
the same time, the AguaCaliente
Band of Cahuilla Indians plans to go forward
with its initiative, said Agua consultant
Gene Raper, who is overseeing the campaign.
Alternative Plan
Agua's initiative would give tribes unlimited
casino expansion rights on reservation land. In exchange, tribes would
pay the state 8.84% of their net profits, the equivalent of the tax that
other corporations pay. Raper added that
the deal being fashioned by the governor "is not acceptable, or else we'd
be there."
Stutzman, Schwarzenegger's spokesman, said
the governor opposed the Agua initiative,
and had not taken a position on the card room measure. Stutzman
stopped short of saying the timing of Wednesday's announcement was intended
to persuade the initiative promoters to back away from their plans.
"Someone else may draw that conclusion," Stutzman
said. "I'm not specifically here saying this is designed in any way to
head off any proposed initiatives."
Some budget experts raise their eyebrows at the concept that the state
could be relying on gambling to help solve its budget problems. The state
already has sold $2.6 billion in bonds financed by payment from tobacco
companies to fill past budget gaps."It
would make us more dependent on vices. If they dry up, that money won't
come in," said Kim Rueben, a budget analyst at the Public Policy Institute
of California.Still, several lawmakers
said Wednesday that a payment to the state of $1 billion or more was likely
to win legislative approval.
"It beats cutting poor people," said Senate President Pro Tem John Burton
(D-San Francisco)."Legislative opposition
to giving us $1.5 billion? I can't imagine what it would be," said Assemblyman
Tim Leslie (
Times Staff Writer