Critics demand audit of Indian gambling fund

Gambling foes are demanding a state audit of funds paid by casino-owning Indian tribes to local governments, contending the tribes are using the money as a “slush fund” to curry favor with local law enforcement officials.

Meanwhile, a bipartisan coalition of lawmakers, led by Sens. Jim Battin, R-La Quinta, and Denise Ducheny, D-San Diego, along with Assemblywoman Bonnie Garcia, R-Cathedral City, are fighting to restore $20 million of the money the governor cut from the fund using his line-item veto authority this year.

The pool of money, known as the Special Distribution Fund, was created to help local governments pay the bill for increased infrastructure and public safety costs associated with tribal gambling. But Gov. Arnold Schwarzenegger raised concerns in his veto message that not enough was known about how local governments, and tribes, are actually spending the money.

“I am supportive of these mitigation efforts and understand their importance,” the governor wrote in his message vetoing $20 million for the fund out of the budget. But the governor said he was cutting the money “because local government agencies have not provided required annual reports that detail the specific projects funded (by the account).”

More vocal critics of the account say many of the expenditures that have been made out of the fund have little or no relation to impacts from tribal gaming. And, they say, the fact that tribes maintain veto authority over how local governments can spend the money, has led to what they say is a misuse of the funds.

Cheryl Schmit, founder of the TKanti-gaming group Stand Up For California, says the fund has been used to pay for millions in “inappropriate” projects. Among them, a $1.7 million search and rescue helicopter for the San Diego Sheriff’s Department, $35,000 for mosquito control in Butte County, $51,000 to the Police Activities League in Palm Springs and $150,000 for tattoo removal equipment in Fresno County.

“What do tattoos and helicopters have to do with gaming?” Schmit asked rhetorically in an interview with Capitol Weekly.

In a letter to Schwarzenegger, Schmit’s group called for an audit of SDF funds to be conducted by the “state auditor or another appropriate investigative agency.”

Schwarzenegger spokesman Vince Sollitto said the governor does not have a formal position on the audit, but said the governor is concerned about how the money is being used. “We know very little about how these funds are being spent,” he said. “We’d certainly like to see more information.”

But Battin and Ducheny want to dump $20 million more into the fund, on top of the $30 million Gov. Schwarzenegger proposed, and retained, in his budget proposal.

Battin’s bill was scheduled to be heard Wednesday in the Assembly Governmental Organization Committee, and then in Assembly Appropriations early next month.

The governor’s office has made it clear they would like all tribes to renegotiate their compact deals with the state, and have all gaming tribes work out comprehensive deals with local governments on how to pay for the locals’ costs associated with tribal gaming. “One of the governor’s existing concerns about the (original) compacts is that they provide inadequate funding” to local governments, Sollitto said.

The SDF was not funded at all until 2003. According to documents filed at the state controller’s office, $55 million has been paid into the fund since then. But because of the way state law is written, local governments that house large casinos retain all of the money paid into the fund by their local tribal casinos. And tribes maintain veto control over how locals can spend the SDF money.

In 2003, Battin co-authored SB 621 with Sen. John Burton, D-San Francisco, which created the formula for tribal gaming funds to be paid to local governments. Under the formula in the bill, counties that have large tribal casinos benefit the most from the local revenues.

That makes some sense, since they would be the most directly impacted by the casino. That formula is set to expire in 2009, under current law

Of the $55 million paid into the fund, $23 million, or 41 percent of the money, has gone to Riverside County. San Diego has received more than $10 million, or 18 percent, of the money. The Battin-Ducheny bill would lock that formula in place indefinitely, and restore $20 million to the fund this year. That could mean almost $4 million more for San Diego and more than $8 million for Riverside.

Want to see more stories like this? Sign up for The Roundup, the free daily newsletter about California politics from the editors of Capitol Weekly. Stay up to date on the news you need to know.

Sign up below, then look for a confirmation email in your inbox.


Support for Capitol Weekly is Provided by: