A federal judge has ruled that it is legal for public agencies to collect taxes from non-Indians who lease tribal land.
For three years, this newspaper has been following a lawsuit in the U.S. Central District Court of California brought by the Agua Caliente Band of Cahuilla Indians against Riverside County. That case closed last week when U.S. District Judge Dolly M. Gee ruled in favor of the county and a local water agency that joined the suit as a defendant.
“The county is pleased that the court carefully balanced the issues and determined that the tax is lawful and does not impair tribal sovereignty,” said Ray Smith, spokesman for Riverside County, California. “The tax simply reimburses the county, schools and other entities that provide valuable public services to non-Indians who lease Indian land. It ensures that these services can continue uninterrupted.”
That’s a far cry from what happened here in 2015, when 931 parcels on leased Swinomish Reservation land were taken off the Skagit County tax rolls in a move that was later shown to be the result of rule crafting by tribal lawyers and unelected state bureaucrats following the so-called Great Wolf Lodge decision.
Swinomish Attorney Stephen LeCuyer stated in an email that he had seen the Agua Caliente vs. Riverside County ruling, but has no comment for this newspaper.
In 2013, the 9th Circuit Court of Appeals struck down a lower court’s decision that Thurston County could tax the structures on the Great Wolf Lodge waterpark on 43 acres of land the Chehalis Tribe purchased and then sold to the federal government to hold in trust as reservation.
Under the terms of the deal it worked with the waterpark’s developer, the Chehalis Tribe owns 51 percent of the Great Wolf Lodge. In early memos to the county assessors in Washington, the Department of Revenue stated the appellate court ruling applied only to structures mostly owned by tribes.
After rounds of “government to government consultations” between tribal lawyers and officials with the Department of Revenue, a “Tax Advisory Memo” was issued that stated all structures on tribal land are immune from county and state taxes, regardless of ownership.
Assessors in Skagit and Snohomish counties were caught off guard. For nearly half a century both counties, as well as the rest of the state, had been assessing personal property tax on the structures owned by non-tribal members on leased tribal land.
Those taxes went to fund schools, the library, roads, fire protection and other essential government services.
With help from Skagit County, the Swinomish tribe established its own taxing authority and started assessing property tax on non-tribal members whose homes were built on leased reservation land. The Shelter Bay Community and people who live in the Pull & Be Damned Road neighborhood now pay property tax, as well as lease payments, benefiting the Swinomish Indian Tribal Community.
Most of the tax money the tribe collects stays with the tribe. That caused the tax burden to support public services to be shifted to people who did not buy homes on reservation land.
Some of the remaining taxpayers, especially those in La Conner School District, saw their taxes go up by close to 25 percent. And they’ll see another tax increase next year when the school levy passed this year kicks in.
The California taxing scheme on reservation land is set up differently than here. Instead of a personal property tax on structures owned by non-Indians, Riverside County collects a “possessory use tax” from people who lease land on the Agua Caliente reservation. The county’s tax is 1 percent of the cash value of the lessee’s interest in the property to pay for essential public services that benefit the tribal land.
In court the California tribe argued that the tax violated many prior court rulings, impacted its sovereignty and dampened its ability to generate income. But the court essentially determined that taxing non-Indians does not harm the tribe.
Despite the California ruling, the tax disparity in our area is not going away anytime soon.
With the tribe already taxing people, the county is loath to reinstate the county tax lest Shelter Bay folks be hit double. Even so, the California court ruling states that it would be fine to double tax.
The California case will likely heat up in the courts again.
Agua Caliente Tribal Chairman Jeff Grubbe was quoted in the Desert Sun newspaper in Palm Springs saying the tribe will appeal the Central District Court ruling. But should the 9th Circuit Court of Appeals take the case and overturn it, like it did in Great Wolf, Riverside County won’t roll over.
“If the ruling is appealed, Riverside County looks forward to defending the decision,” Smith said.
It could go all the way to the U.S. Supreme Court.