Proposition 94-97

Indian Gaming Agreements

Support
 

California Fire Chiefs Association
City of Fresno Chief of Police, Jerry P. Dyer
Home Builder Association of Tulare/Kings Counties
San Diego Regional Chamber of Commerce
Business, Industry, and Government Coalition of the South San Joaquin Valley

Oppose
 

SEIU California State Council
Los Angeles, Contra Costa, San Diego, San Francisco: County Federation of Labor AFL-CIO
California Federation of Teachers
California School Employees Association
California Alliance for Retired Americans

Background
 

The State Constitution allows the Governor to negotiate agreements, known as compacts, with Indian tribes. A compact authorizes a tribe to operate casinos with certain slot machines and card games. The Constitution gives the Legislature the power to accept or reject compacts.
 

In 1999, the Governor and 58 tribes, including the Pechanga tribe, reached agreements on casino compacts (known as the “1999 compacts”), and the Legislature passed a law approving them. All of the 1999 compacts contain similar provisions giving tribes exclusive rights to operate certain gambling activities in California. Several tribes have negotiated amendments to their 1999 compacts in recent years. However, for most of the 58 tribes—including the Pechanga tribe—the 1999 compacts remain in effect today.
 

Pechanga Tribe’s Casino has about 2,000 Slot Machines. The Pechanga tribe’s lands are in Riverside County near Interstate 15 and the City of Temecula—just north of the San Diego County line. The Pechanga tribe’s casino facility includes about 2,000 Nevada-style slot machines, the maximum allowed under the tribe’s 1999 compact. In addition, the tribe currently operates over 1,500 other machines (such as bingo-style machines) which are not governed by compacts.
 

Currently, neither the state nor a tribe is subject to CEQA’s requirements when a casino is built. Under the 1999 compacts, when tribes build, expand, or renovate casinos, they must prepare a report on the significant negative environmental impacts of the project and offer the public a chance to comment. They must also make a “good faith effort” to reduce or avoid those impacts outside of their reservations.
 

Under the 1999 compacts, tribes agreed to certain requirements in the area of labor relations. Unions that want to organize employees of casinos must be given access to the employees. Both the tribe and the union can express their opinions so long as they do not threaten employees, use force against them, or promise benefits. Before a union can represent employees in negotiations with the tribe, it must win a secret ballot election of the employees. (A few later compacts have a different process for determining union representation.) No union currently represents the Pechanga tribe’s.
 

In August 2006, the Governor and the Pechanga tribe reached an agreement to change the tribe’s 1999 compact. The compact amendment would allow the tribe to expand its gambling operations significantly. It would also require the tribe, among other things, to pay more money to the state.
 

In June 2007, the Legislature passed Senate Bill 903, which approves the compact amendment with the Pechanga tribe. The Legislature also passed a bill approving MOAs with the Pechanga tribe and three other tribes. The Governor signed the bills in July 2007.
 

The bill approving the compact amendment with the Pechanga tribe would have taken effect on January 1, 2008. However, this proposition, a referendum on SB 903, qualified for the ballot. As a result, SB 903 was put “on hold,” and the compact amendment and MOA can take effect only if this proposition is approved by voters.
 

If this proposition is rejected, the tribe will continue to work under the 1999 compact

Please note: Propositions 94-97 contain the same language for the proposed compacts signed by Governor Schwarzenegger. The only difference is that each proposition pertains to difference casinos.

The Casinos are as follows:
 

94: Pechanga Tribe
95: Morongo Tribe
96: Sycuan Tribe
97: Agua Caliente Tribe

The GAC will be reviewing Propositions 94-97 as a whole, and the one staff recommendation will be the same for each proposition.

Summary
 

The compact amendment allows the Pechanga tribe to operate up to 7,500 Nevada-style slot machines at its casinos, up from 2,000 under the 1999 compact.
 

If passed, the Pechanga tribe’s payments to the state would increase significantly. If passed:
 

Revenue Sharing Trust Fund
 

Its payments to the RSTF (Revenue Sharing Trust Fund) would increase to $2 million per year—up from the current annual level of about $300,000. A tribe’s payments to the RSTF are based on a portion of the slot machines it operates.

 

- Currently, the Pechanga tribe pays about $300,000 per year to this fund. The state distributes $1.1 million per year from the RSTF to each of the 71 federally recognized Indian tribes in California that have no casino or a small casino (less than 350 slot machines).
 

- The compact amendment requires the state to use a part of the tribe’s payments to the General Fund if they are needed to cover shortfalls in the RSTF; which was originally funded by the SDF.
 

Special Distribution Fund
 

The tribe’s annual payments to the SDF (Special Distribution Fund)—currently around $28 million—would end. The state spends moneys from the SDF for purposes related to casino compacts, such as: covering shortfalls in the RSTF, funding programs that assist people with gambling problems, paying costs of state agencies that regulate tribal casinos, and making grants to local governments affected by tribal casinos. These programs (such as grants to local governments) funded by the SDF might need to be reduced and/or paid for from the General Fund.
 

General Fund
 

For the first time, however, the tribe would make payments to the General Fund, the state’s main operating account. The Pechanga tribe’s annual payment to the General Fund would total at least $42.5 million under the compact amendment.
 

In addition to this minimum payment, the tribe would pay to the General Fund an annual amount equal to 15 percent of the net revenues of the next 3,000 slot machines it adds to its casinos after the compact amendment takes effect. If the tribe operates more than 5,000 slot machines, it would pay the General Fund an annual amount equal to 25 percent of the net revenues of those additional slot machines.
 

Environmental Impact
 

The compact amendment expands requirements in the 1999 compact for the Pechanga tribe to address significant environmental impacts of its casinos that occur outside of the tribe’s reservation. Specifically:
Before the tribe builds or expands a casino, it would be required to prepare a draft report on these impacts and offer the public a chance to comment. The tribe then would prepare a final report on environmental impacts—including responses to public comments.
 

Under these agreements, significant environmental impacts outside of the reservation must be reduced or avoided, where feasible.
The agreements also must provide for local governments to receive “reasonable compensation” for increased public service costs due to the casino, such as costs of public safety and gambling addiction programs.
The tribe, county, or city can demand binding arbitration in cases where the parties cannot come to an agreement. When an arbitrator reaches a decision, it would become part of the required agreements with the local governments described above.
 

Pros

 

For the first time, the tribe would make payments to the General Fund, the state’s main operating account. The estimated revenues will add up to 25% in additional funding in to the state General Fund.
 

The expansion of the casinos will create thousands of new jobs.
 

The new compact agreements require the tribes to coordinate with local police and fire agencies to compensate local governments for any local services that are needed.
 

The new compact agreements preserve the right of Indian casino employees to be represented by unions through secret ballot
 

The new compact agreements ensure that tribe will comply with environmental review provisions that mirror CEQA.
 

Cons

As tribal gambling expands, Californians would spend more of their income at tribal facilities, which are exempt from most types of state and local taxes. This means Californians would spend less at other businesses that are subject to state and local taxes.

The state and local governments currently receive revenues from other forms of gambling—such as the California Lottery, horse racing, and card rooms. Expanded gambling on tribal lands could reduce these other sources of state and local revenues.

The Big 4 compacts encourage and allow rapid casino growth.

The deals authorize 17,000 new slot machines – more than the combined number of slots at 12 Vegas casinos

Labor unions are opposed because while the Big 4 tribes would make billions in profits, their deals lack the most basic protections for workers.

The Big 4 deals would let just 4 of the state’s 108 tribes control one-third of the state’s Indian gaming pie with dominant casinos that could economically devastate other tribes.

 

Contact Amy Huerta, the Chamber's Government Affairs Manager for more information at (559) 495-4818 or ahuerta@fresnochamber.com