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Tim Hamilton, director of the state service-station association, the Automotive United Trades Organization.
By Erik Smith
Staff writer/ Washington State Wire
OLYMPIA, Sept. 9.—The state Supreme Court will weigh in on one of the most controversial deals of the Gregoire Administration – an arrangement that gives Indian tribes a big cut of the state’s gas-tax money, worth a half-billion dollars or more over the next 10 years. The state Supreme Court notified players Thursday that it will hear arguments on one of the key points in the case – whether the public has any right to challenge agreements struck between the governor’s office and Indian tribes. The state argues that the public has no right to sue, because the tribes are considered “sovereign nations.” The state’s gas-station operators say the public does. The case is expected to be heard sometime early next year.
Though the case was filing by one of Olympia’s smallest and scrappiest trade associations, the Automotive United Trades Organization (AUTO), the battle has widened to involve some of the biggest players in the state’s business community. Among those submitting friend-of-the-court briefs on AUTO's behalf are the Association of Washington Business, the Association of General Contractors, the National Federation of Independent Business and the Washington Oil Marketers Association. Also filing a brief is the Washington Policy Center, which promises a report on Indian gas-station pricing later this month. Of course the public has the right to go to court, they say. But more importantly, if the state keeps giving gas-tax money to the tribes, it’s going to make it harder to convince the public to pass gas-tax increases in the future. That means the state's transportation system itself is at stake. An Important Skirmish
Tim Hamilton, director of the service-station association, is counting the court decision as a major victory – even though it’s a long way from an ultimate decision in the case. “I’ve always felt that if we could get there [and argue the case], we would prevail,” he says. The issue that will be decided by the court isn’t the central argument, but it is certainly a major hurdle. If the public can’t sue, the case can go no further. The story starts with a court ruling back in 2006 that said Indian tribes didn’t have to pay the state gas tax on fuel sold at tribally owned gas stations. That might have been a huge problem. It meant tribes could undercut non-Indian stations by as much as 37.5 cents a gallon, in a state where reservations dot the landscape and a tribal fuel station is never far away. The state had a simple solution – it could change a definition in state law and declare that the tax was due when a manufacturer sold gas to a distributor, before it ever got to the reservation. Lawmakers did exactly that. But amid a complicated flurry of political deal-making during the 2007 session, Gov. Christine Gregoire maintained the tribes needed something more. Her argument was that they could always get into the refining business themselves and avoid state taxes that way. So she asked the Legislature for authority to strike deals with the tribes on her own. Deal Called Giveaway What her office came up with was a standard agreement that keeps tribes out of the refining business. In return, it gives them an amount equivalent to 75 percent of the gas-tax money generated by sales at their stations. They’re supposed to spend the money on road projects. Some 23 of the states 28 tribes have signed.
It has been a lucrative arrangement, and business is booming. Tribes are expanding their stations and throwing up new ones. The Department of Transportation projects that tribal sales will increase dramatically over the next 10 years. At the current rate of growth, the total distribution will be $427 million, representing about half the projected deficit in the state highway-construction account over the same period. And that doesn’t count the possibility that the tribes might get into the lucrative truck-stop business, which accounts for about 10 percent of the fuel sales in the state. Gas-station operators howl that the tribes are using the money to undercut nearby non-Indian stations, but because the public doesn’t have the right to inspect the books, no one can tell for sure. The idea that tribes would get into the costly refining business is ludicrous, critics say. And they call it a giveaway of tax money to a politically powerful interest group that has been spending huge amounts of casino cash to support Democratic candidates.
The key point in the case is this. The state is taking the money from the state gas-tax account. Unlike other taxes levied by the state, fuel-tax money is protected by the state constitution. The 18th Amendment, adopted in 1944, says fuel-tax money can only be spent for highway purpose. A Major Skirmish! You might say that the state's arguments up to this point have been a bit of a pre-game show, centering on a technical point of law. The state has been arguing that the lawsuit is improper in the first place. And it points up a key distinction between this case and all the other challenges that have been filed against the state’s cigarette and gambling deals, all of which have failed because of tribal sovereignty issues. Unlike those cases, this one doesn't seek to overturn the gas-tax compacts. Instead, the service-station operators say the use of gas-tax money is improper. If the state wants to pay the Indian tribes, they say the money ought to come from somewhere else – perhaps the state general fund. So they don’t name the tribes in their suit. Instead, they are suing the governor and the director of the Department of Licensing, which administers the money. Meanwhile, the state says the tribes are an “indispensable party.” They have to be named in the suit. And if they are, then the suit has be thrown out, because the tribes are “sovereign nations,” and they can’t be sued by the public. A Gray’s Harbor Superior Court judge ruled for the state earlier this year, saying the state Supreme Court needed to decide that issue before the case went any further. As for his own opinion, though, Judge Gordon Godfrey said he found the state’s argument “personally repugnant.”
What the Briefs Don’ Say. The state’s briefs don’t express the central problem directly. If the state can’t use gas tax money, it has to get it somewhere else. That poses a huge political problem. The only other source of money big enough to pay the tribes is the state general fund. But it’s not as if the state has a penny to spare – right now, it appears the state faces another massive shortfall next year, on the order of $2 billion. If lawmakers were to dip into the general fund to pay the Indian tribes, it would force lawmakers either to raise taxes or cut state programs, and it could result in the layoffs of unionized state employees. That’s a political question, not a legal one, and whether it is proper for the courts to prevent the Legislature from making that decision is never raised directly in the state’s legal briefs. Instead, the state argues in an oblique fashion that the tribes might not fare so well if the decision is the decision is thrown back to the Legislature. That's what makes them an indispensible party to the case. The state says, in legal language, “the litigation between the state and the non-tribal plaintiff may ‘as a practical matter’ impair [a] tribe’s ability to protect its interests under the agreements.”
Meanwhile, the service station operators the Legislature and the governor’s office ought to be forced to make that tough political decision. The compacts would remain in place even if the service station operators win the case, Hamilton notes. But he says, “I don’t think the Legislature would appropriate money for this and start laying off teachers. So we can stop it
Edited by Rivrguy (09/09/11 09:24 PM)
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Dazed and confused.............the fog is closing in
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