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Mohawk Deal Raises Prices On Reservations May 13, 2003
ALBANY - A northern New York Indian tribe agreed Monday to settle its long-standing land claims lawsuit against the state and to raise the price of cigarettes and gasolines sold to non-Indians in return for permission to open a sprawling casino in the Catskills.
The agreement between Gov. George E. Pataki and the leadership of the St. Regis Mohawks came the day before Seneca Nation of Indian members were expected in Albany to rally against the state's attempt to collect cigarette and gasoline taxes.
The agreement with the Mohawks settles a 1982 land claim brought by the tribe against the state over 15,000 acres of land in northern New York along the St. Lawrence River. The settlement includes $100 million in payments by the state and federal governments, as well as permission for the tribe to acquire 7,000 acres of land near its Franklin County reservation.
The deal also requires Mohawk retailers to charge higher prices to non-Indian consumers for tobacco and gasoline products. Non-Indian retailers have long complained the tax-free sales by Indians, a huge business on the Seneca reservations, have unfairly undercut their ability to do business.
Pataki said the agreement he forged is "by far the best way to deal with" the contentious sales tax issue. The Legislature, in its 2003 budget being considered by the governor, orders the Pataki administration to begin collecting taxes on reservation sales.
Mohawk vendors will agree to charge non-Indians a "retail fee" that will equal the amount of sales and excise taxes charged by non-Indian retailers. It also imposes minimum price standards for cigarettes that non-Indian retailers now have to follow.
The Mohawks also agreed that all cigarettes and gasoline products sold on the reservation will be purchased from wholesalers licensed by the state Tax Department.
However, the deal does not apply to existing Mohawk stores with cigarette or gasoline sales of less than $2 million a year - the vast majority of retail operations currently on Mohawk land, sources say.
The agreement also features a window of opportunity for Mohawk retailers exceeding the $2 million threshold to create spin-off businesses that would allow them to continue operating tax-free sales. Also unclear is how a business would be audited to determine if it met the threshold.
The extra money collected by sales to non-Indians will not go to the state. Instead, the money will be funneled to the Mohawk government, which in turn can spend the money on governmental programs. The Pataki administration said the money cannot be spent on programs to help Indian businesses compete against non-Indian retailers.
Seneca leaders and non-Indian retail groups were still studying the Mohawk deal Monday evening. Alma Ransom, a St. Regis tribal chief, said Monday's memorandum of understanding will, when given final approval, "preserve our nation and secure our future."
But there are still many uncertainties. The land claim deal was not embraced by two other plaintiffs in the long-standing Mohawk case: a traditional Mohawk faction and a group of Mohawks living on the Canadian side of the St. Regis reservation.
The Pataki administration, however, believes the lawsuit will be erased if the Mohawk tribe, in a referendum, and Congress approve the settlement.
Also, the Catskills resort area - where the Mohawk casino would be located - is about 200 miles away from the St. Regis reservation. That could run into trouble with the federal government's Department of Interior, which raised serious concerns about off-reservation casino deals when the Senecas submitted their application last year.
Besides the Catskills casino, the deal also calls for slot machines at the tribe's existing casino in Franklin County. That casino has been operating illegally for several years because the federal government denied the tribe's gambling application. Like the Seneca deal, the state will, over time, get 25 percent of the slot machine revenue.
The Mohawk land claim settlement involves $100 million in state and federal funds over the next 35 years. The Mohawks also will be allowed to purchase as much as 7,000 acres in the region. The state and federal governments will create a $10 million fund the Mohawks can use for infrastructure improvements and other projects. Mohawk members will also be eligible to attend for free any state university college.
When he made his casino deal with the Senecas, Pataki was criticized for not settling the Senecas' land claim lawsuit involving Grand Island and 40 other islands in the Niagara River.
On Monday, Pataki downplayed the absence of a Seneca land claim deal.
"Legally, we won the land claim lawsuit against the Senecas,"
he said. That case is on appeal in federal court. A date for the the Mohawk
referendum has yet to be set and its passage is uncertain.
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