A Forward-Thinking Focus on Infrastructure Builds Tribes’ Economic Stability
Right now, infrastructure is a hot issue that is being discussed by city, county and even country leaders. That’s because government officials and policymakers know that sufficient infrastructure has always been a key factor in attracting and retaining business interests.
Tribal leaders are also concerned about infrastructure, but their focus is not just on obsolescence; it’s on having the basic infrastructure in the first place. The Energy Information Administration estimates that 14% of households on Native American reservations have no access to electricity, 10 times higher than the national average. In Arizona Native Nations like the Hopi and Navajo, 40% of the Reservations’ homes do not have running water. Moreover, according to the 2015 FCC Broadband Progress Report, 85% of rural tribal members lack access to 25 Mbps/3 Mbps broadband.
While cities, counties and states can rely on property and business owners to generate tax revenue for schools, roads, communications, water and electric systems, Native American reservations do not have this same revenue stream since the land on which they live is held in trust by the Federal Government, not owned by their residents. This means reservations must attract sustainable industry activities that will create the funds to build the basic physical and organizational structures and facilities necessary for the operation of their communities. Some of the Native American communities that embraced gaming have been able to start to provide some of the needed services and facilities in their communities, but the need is great and the cost is enormous. What’s more, no one can guarantee the future of gaming on reservations and for Native Nations that are remote or cannot square gambling enterprises with their culture, ways to build their infrastructure remain elusive.
Forward-thinking tribes are looking for ways to diversify their industries to ensure their self-sufficiency and some have been successful despite innate location challenges. For example, although the Mississippi Band of Choctaw Indians Reservation is scattered over 10 counties, this tribe has been able to put together a diversified portfolio of manufacturing, service, retail and tourism enterprises that has helped them reinvest more than $500 million in economic development projects in Mississippi. Likewise even though the Ak-Chin Indian Community does not sit on a major interstate, it has been able not only to expand its recreation attractions, but also to create a transportation hub for its industrial park, Santa Cruz Commerce Center, with the purchase and improvement of the former Phoenix Regional Airport, now renamed the Ak-Chin Regional Airport. Even before its most recent economic development activity, the Community’s economic impact was estimated at nearly $437 million in 2010.
Despite tribes’ drive to become self-sufficient, many non-Natives begrudge the assertion of tribal sovereignty, misconstruing that “reservations are just welfare states funded by the Federal Government.” Even the introduction of gaming is seen as a form of economic assistance provided via federal dispensation of “special rights” to Native Americans. According to a 2004 Harvard University Faculty Working Paper entitled, “Myths And Realities Of Tribal Sovereignty: The Law And Economics Of Indian Self-Rule” by Professor of International Political Economy Joseph P. Kalt, and Professor of Law Joseph William Singer, “When the U.S. took 98 percent of the land in the continental U.S. from Indian nations, it made certain promises in return. The payments made by the U.S. under its general trust obligation and in various government programs are making good on those promises. Indians and Indian tribes receiving such payments are not welfare recipients; they are the original owners of the land in the United States and the benefits provided by the Federal Government are properly understood as mortgage payments the U.S. is making in return for rights to use tribal land.” The fact remains that in 2016 nearly 1 in 3 Native Americans live below the federal poverty line.
Hand-in-hand with this misperception about tribal sovereignty is the myth that Native Americans do not pay taxes. This is not true. American Indians pay federal income taxes regardless if they work and live on a reservation; regardless if they live off-reservation and work on-reservation; or regardless if they work and live off-reservation. Only tribal members who live and work on reservations are exempt from state taxes (in the same way that California cannot tax residents who live and work in Arizona), but tribal governments pay FICA, unemployment and Social Security taxes on the earnings of their employees. They also pay property tax on any land not held in trust by the Federal Government. While tribal governments do not pay taxes on their revenues, they do make substantial payments in lieu of taxes under the hundreds of tax and gaming compacts.
Some tribes have started to impose their own tax policies on their reservations to shore up the short gap for infrastructure needs, but it is a delicate balance. “We want to keep our reservation attractive for new business interests,” said Ak-Chin Treasurer Brandon Peters. “That’s why our Industrial Park Board works with the Council and other departments to customize leases and make the process of locating here as easy as possible.”
In the final assessment, diversifying industry in order to build infrastructure in Native Nations is not just about building facilities. It is about building a Nation that is secure in its own self-determination.