Article by Erik Smith. Published on Monday, October 10, 2011 EST.
Department of Licensing Won’t Reveal How Much Public Money Each Tribe Gets - Public Records Advocates Alarmed
By Erik Smith
Staff writer/ Washington State Wire
OLYMPIA, Oct. 10.—As questions are being raised about the state’s multi-million-dollar distributions of gas-tax money to Indian tribes, the state Department of Licensing has drawn the veil of secrecy tighter.
Last month the department stopped releasing information about the amount of public money that is given to each individual Indian tribe. All that any Washington taxpayer now can learn is the total figure - $28,142,452 last year, and growing.
What prompted DOL’s decision appears to be a recent reinterpretation of state law. But there does seem to be a curious bit of timing involved. The department is closing the door just as questions are being raised about the state’s big distributions of public money to the tribes. Last week the Washington Policy Center released a survey showing that tribal fuel stations consistently undercut non-Indian prices. In September the state Supreme Court agreed to hear a case filed by an association of service-station operators challenging the state’s use of gas-tax money for the tribal payouts.
The secrecy alarms public-records advocates. Since the compacts began in 2007, audits have been kept secret under the gas-tax deals, so the public can’t see how money is spent – and not even the state gets the full report. Now the public can’t see how much public money is going to each tribe. The whole thing rankles Rowland Thompson, lobbyist for Allied Daily Newspapers and a member of the state Public Records Exceptions Accountability Committee.
“The U.S. government doesn’t say, well, we paid this much in foreign aid, this is the gross number – and we don’t want you to know which country it went to.”
Count on this one to get hotter. Thompson says he plans to offer a resolution next time the “Sunshine Committee” meets, to sweep at least some of the secrecy aside. That challenges the underpinnings of the state’s deal with the tribes.
Big Payments to Tribes
The department insists the payments to the tribes should have been confidential from the start. The problem is that if you know how much the state is paying the tribes, a little simple math will tell you how much fuel the Indian stations are selling. That ought to be considered proprietary business information, just as it would be for any other taxpayer, says Gigi Zenk, spokeswoman for the department.
The odd thing about it is that the department was releasing that very information right up until late last year. In total, we know that $98 million has gone to the 23 tribes that have struck compacts with the state, and sales are growing every year. According to the information that was once released on a routine basis by the department, we know that the top three tribes were the Spokanes, the Puyallups and the Swinomish, for instance - at least up until the 3rd quarter of 2010.
Since the compact arrangement began, the Spokanes got $8.9 million, and the Puyallups and Swinomish each got $6.9 million.
But anything that came after last September, the department isn’t saying. Zenk said earlier releases of information were a mistake. “This information is prepared for other purposes and should not have been disclosed,” she said.
Plenty of Skeptics
You might say there are plenty of skeptics out there. Michael Ennis of the Washington Policy Center says, “They’re getting pretty tightlipped and holding their cards to the vest now that people are beginning to look over their shoulders at this issue.”
Members of the public records panel appeared a bit stunned during a meeting Sept. 28 that payments of public money to Indian tribes could be kept secret. The panel makes recommendations to the Legislature and state government about public-records policies.
David Zeeck, managing editor of the Tacoma News Tribune said, “If we don’t know how much the individual tribes get, we don’t know anything about this growing or shrinking market power of this competitor out there and what effect it has. I think it is a big issue for the citizens of this state.”
The change in DOL policy was caught by Tim Hamilton, director of Automotive United Trade Organization, the service station association. He noted that the most recent report for tribal distributions left out the data from the 4th quarter of last year. He filed a public records act request for more recent figures and was refused on the grounds that the information is considered confidential “personal information.”
Says Hamilton, “This scheme is the only one I know of outside of the CIA and national defense industries where public tax dollars are sent to a business and the entire process is covered under confidentiality.”
The best explanation of what happened appears to come in Hamilton’s rejection letter. The letter says the agency had “been reviewing our RCWs” – government-ese for the state lawbooks. But what prompted the review and reinterpretation of state law is unclear. At the Sept. 28 meeting, Josh Johnston, the agency’s tribal liasion and public records officer, said he was unaware that gas-tax distribution information for specific tribes was even being released in the first place.
Did one of the tribes complain? Kelly Croman, the attorney for the Puyallups who has been the lead tribal advocate for the gas-tax policy in the Legislature, told the public-records committee the decision is a mystery to her, too. “I don’t know how that decision was made by the Department of Licensing. And I didn’t make a complaint about it, so I don’t know the history there.”
Audits Secret, Too
Secrecy has been a big issue in the Indian gas-tax deal since the beginning. The deal was prompted by a 2006 federal court decision that held Indian tribes could not be required to collect state gas-tax money from stations on tribal land. That’s because tribes are considered “sovereign nations.”
It was a big problem. Tribes might have been able to undercut every seller by 37.5 cents a gallon – a whopping discount that would have cut deeply into highway construction funds, not to mention driving non-Indian gas station operators out of business. The state found a neat solution. The Legislature in 2007 changed the “taxable event” from the sale at the pump to the sale that takes place between the refiner and distributor. That sale takes place miles away from the reservation, and so there’s no question that the state gets to collect its money.
So how come the tribes got a cut? The governor’s office and the tribes argued that they could evade state tax by opening their own refineries and tank farms. To keep them out of the business, that 2007 legislation also allowed the governor’s office to negotiate deals with the tribes to give them a big share of tax revenue. Under the compact arrangements they get payments equivalent to 75 percent of the taxes generated by sales at their stations. There were plenty of critics at the time: Republicans charged that it was a sweetheart deal between the governor and an interest that had proven generous to Democratic campaigns. Others pointed out that the compacts were modeled after the original agreements negotiated by the Swinomish and Squaxin Island tribes, to settle the case with the attorney general’s office.
But the big issue these days is how the tribes are spending the money. The tribes are supposed to spend it for highways, police, transit and some recreational improvements. Audits are done each year. Yet the state never sees the audit reports. It just gets summary letters from the accountants, and under the terms of the deal, the public is not allowed to see even those letters.
Hamilton’s association contends that the tribal expenditures violate state constitutional restrictions on the use of gas-tax money. That’s the basis for the lawsuit. The service station operators say they suspect the money is being plowed back into the Indian stations, allowing them to undercut the market – but that’s something they can’t prove without records.
A Blow to Open Government
Croman told the public records committee that tribal privacy “absolutely was a dealbreaker.”
And she said the threat of tribal entry into refining and distribution was “very real.” So the state got something in return for its money.
But Thompson said the secrecy runs counter to every principle of open government. Maybe the public doesn’t need to see invoices and proprietary business information. But at the very least it ought to be able to see the sketchy letters that the auditors provide the state. “When auditors do an audit, they ought to put their reputations on the line,” he said.
And the idea that the state could pay public tax money to anyone and not have it show up in the public record is just plain wrong, he said.
The tribes are entitled to keep their business information confidential, just like any other business, he said, “but if they are receiving tax money from the state of Washington, that’s a completely different matter. If it reveals their business activities, that’s too bad.”