News

Special Distribution Fund fulfills tribes’ promise to local governments

The exclusive gaming rights that Indian tribes in California enjoy have been
strongly supported by the public. More then 60 percent of voters endorsed
tribal efforts to achieve self-reliance through tribal gaming, and to create
a better future for their members, by passing first Proposition 5 in 1998
and then Proposition 1A in 2000.

Building on the public’s support, Tribal Nations negotiated with the state a
means of addressing multiple issues that arise from tribal gaming. The
groundbreaking 1999 Tribal gaming compacts established the Indian Gaming
Special Distribution Fund (SDF), into which twenty-eight Tribes would
contribute a set amount of monies derived from tribal government gaming
operations.

The SDF returns to local communities a portion of gaming revenues to
mitigate for gaming’s inevitable footprint by providing grants to cities and
counties. The SDF also represents a funding source for state regulatory
oversight of the compacts, freeing taxpayers from paying for inspectors and
auditors. The California Gambling Control Commission and the Department of
Justice’s Division of Gambling Control both receive millions of dollars from
the SDF to ensure compact provisions are being followed, and help weed out
any bad actors in the gaming community. In addition, the SDF provides a
crucial role in backfilling monies in the Revenue Sharing Trust Fund, which
distributes revenue from gaming to non-gaming Indian tribes.

Implicit in the SDF was a desire to create non-adversarial relationships
between Tribes and local communities, to approach each other with the
respect of a government to government negotiation, and ensure that revenue
generated from local sources would return to local communities. I authored
SB 621 three years ago which created the legislative structure to implement
this commitment. The legislation formed Local Community Benefit Committees
comprised of both local officials and Tribal representatives and tasked them
with jointly reviewing and approving mitigation projects.

The SDF has been a clear success, returning tens of millions of dollars to
our local communities. Grants have funded gambling addiction programs, added
county and city law enforcement equipment and personnel, purchased new
emergency response equipment, and helped build infrastructure improvements
in counties throughout the state. Over the course of the 20-year compacts
signed in 1999, gaming tribes will direct more than a billion dollars into
the Special Distribution Fund.

However, the Schwarzenegger administration’s recently signed compacts do not
include SDF payment provisions. In my view, this is a crucial reason why the
compacts have had so much difficulty passing the legislature.

The Schwarzenegger compacts rely on third party arbitrators to negotiate
mitigation requirements if an agreement cannot be reached between a tribe
and the local community–exactly the opposite intention of the SDF. Instead
of respecting tribal sovereignty and entrusting a tribe’s willingness to
negotiate with cities and counties as equal partners, the new compacts tell
a tribe that they must entrust their sovereignty to someone who is
essentially a stranger. Instead of encouraging tribes and local communities
to work together, the incentive will be to play hardball on mitigation
issues and angle for a favorable arbitration ruling.

The recent compacts reflect the government’s eagerness to bank millions of
dollars from gaming revenues to help with the budget deficit. However, the
newly negotiated compacts fail to provide a funding source, General Fund or
otherwise, for regulatory oversight of their gaming facilities. As a result,
the Gambling Control Commission must continue to rely on the SDF to fund its
activities, including oversight of the recent compacts.

But it is grossly unfair to compel the SDF paying tribes to pay for the
regulatory enforcement of compacts that they are not a party to. It would be
like asking California taxpayers to pay for the state governments of Nevada
or Arizona. This is hardly an equitable arrangement, and it has provoked
opposition from legislators and many of the 1999 compact signatories.

It is a curious thing that state negotiators stubbornly insist on changing a
process that has worked so well for other tribes. A dispassionate look at
the last several years would show that the Special Distribution Fund
provides mitigation solutions for the 1999 compacted tribes, local
communities, and the state.


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