Propositions 94-97

Well, I've put this off for as long as I could. It wouldn't be a voter guide without discussing these propositions.

Props. 94-97 are compacts with 4 Indian tribes, all located in southern California. Without getting too much into the funny business that accompany these compacts (how do you exactly lose compacts?), the fundamental question regarding these propositions is simple- do you like gambling? The SacBee's Daniel Weintraub laid this out in his editorial from today. Personally, I don't mind gambling- I have a good time playing blackjack and Texas Hold-Em, but I don't really bother with slot machines. There are some other issues relating to these compacts, primarily- do you like unions and do you like the environment, but we'll get to those later.

So, what does each Proposition do?

Prop. 94 is a compact with the Pechanga tribe which is in Riverside County. Currently, the Pechanga tribe has 2,000 slot machines, and make annual payments to the Revenue Sharing Trust Fund ($3,000), which shares casino revenue with the other recognized tribes in California. It also makes payments to the Special Distribution Fund ($28.3 million), which covers any shortfall in the Revenue Sharing fund, pays for gambling addiction programs, helps pay for the agency that regulates casinos and makes grants to local governments. It also allows for the tribe to build and maintain two casino's on their property.

The compact would allow the Pechanga tribe to increase the number of slots to 7,500, increase its annual payments to the Revenue Sharing fund to $2 million a year, end payments into the Special Distribution Fund, instead, it would pay at least $42.5 million a year into the state's General Fund. Additionally, the tribe would pay an annual amount equal to 15% of the net revenues of the next 3,000 slots, and an additional 25% of net revenues if the tribe installs 5,000 slots. Net revenue is the amount of money that gamblers put in the slot minus the money paid out as prizes from the machine. The state would then use the payments into the General Fund to cover any shortfall in the Revenue Sharing fund. It does not increase the number of casino's the tribe can build and operate. Additionally, the compact requires tribes to have an independent audit of the casino's operations annually, and make that audit available to the state regulators. The Legislative Analyst estimates that the tribe could end up paying over $100 million annually by 2030.

As for the environment- the previous compact said that the tribe must make a good faith effort to reduce or avoid significant negative environmental impacts on its lands. This new compact says the tribe will prepare a draft environmental report, put it up for public comment, and reach agreements with Riverside County and any city that lays adjacent to the proposed casino, with the option for arbitration to settle any disagreements.

For the union, the proposed compact does not change the terms of the previous compact, which allows unions access to employees and any union formation is subject to a secret ballot vote by the employees.

Prop. 95 is a compact with the Morongo Band of Mission Indians in Riverside County. The Morongo currently pays $20,000 to the Revenue Sharing fund and $29 million to the Special Distribution Fund. The Morongo is authorized to operate 2 casinos with a total of 2,000 slot machines. The new compact will allow the Morongo to operate an additional auxiliary facility, with no more than 25 slot machines, increase the number of slot machines to 7,500, increase the Morongo's payments to the Revenue Sharing fund to $2 million, and pay a minimum $36.7 million to the General Fund. The same terms apply as above if the tribe increases the number of slots to 3,000 or 5,000. The Legislative Analyst estimates that the tribe could end up paying over $100 million to the state by 2030. The same terms apply as above to environmental and union issues.

Prop. 96 is a compact with the Sycuan Band of the Kumeyaay Nation in San Diego County. The Sycuan currently pays $2.3 million to the Revenue Sharing fund and $2.6 million to the Special Distribution Fund. The Sycuan is authorized to operate 2 casinos and 2,000 slot machines. The new compact keeps the number of casinos at 2 (but adds 1,600 acres that may be added to the boundary of the reservation in the future- which, according to the San Diego Union Tribune is the result of the government losing the compacts, and is the basis for their No on 96, but Yes on 94, 95 and 97. I don't profess to understand these distinctions), but increase the number of slot machines to 5,000, increase payments to the Revenue Sharing fund to $3 million, and pay a minimum $20 million to the General Fund. The tribe would pay an amount equal to 15% of net revenues of new slot machines it adds after the compact takes effect. The Legislative Analyst estimates that the tribe could end up paying over $50 million to the state by 2030. The same terms apply as above to environmental and union issues.

Prop. 97 is a compact with the Agua Caliente Band of Cahuilla Indians in Riverside County. The Agua Caliente currently pays over $500,000 to the Revenue Sharing fund and $12 million to the Special Distribution Fund. The Agua Caliente is authorized to operate 2 casinos and 2,000 slot machines. The new compact allows the tribe to operate 3 casinos (with local support), increases the number of slot machines to 5,000, increases payments to the Revenue Sharing fund to $2 million, and pay a minimum of $23.4 million to the General Fund. The tribe would pay an amount equal to 15% of net revenues of new slot machines it adds after the compact takes effect. The Legislative Analyst estimates that the tribe could end up paying over $50 million to the state by 2030. The same terms apply as above to environmental and union issues.

Two additional points- 1) the Legislative Analyst's estimates are based on the tribes operating at their max ability and 2) the new compacts all expire on December 30, 2030.

Basic info on the Revenue Sharing Trust Fund- the fund distributes $1.1 million per year to each of the 71 recognized Indian tribes with no casino or have a small casino (defined as having less than 350 slot machines). There are 61 tribes that may pay into the fund (of which 26 actually paid into the fund during the 2007 fiscal year according to this report from the California Gambling Control Commission's Tribal information page).

If approved, these compacts will provide an extra $5.9 million per year to the Revenue Sharing fund, in addition to at least $129.6 million per year to the General Fund (at least $2.9 billion through 2030). Personally, I am a bit wary of estimates of $9 billion in new funding without more concrete numbers, as well as assumptions about where the money may go (especially since my impression is that these funds are all purpose funds, and can be used for whatever the legislature wants) and any budgetary games that are played with these funds. That being said, at least $130 million a year is still $130 million and every little bit counts, right?

Digression- So far, I have received two mailers regarding Ess Eff's Prop. A and one mailer from the California Republican party, and it was on these Propositions letting me know that the California Republican party says to vote yes on Props. 94-97; no mailers from a candidate or any phone calls, which I can really only assume that that will change over the next week.

Ok, so where does all of this leave us? Frankly, I'm still not sure. I'm not opposed to gambling; the tribes, state and feds all worked on these new compacts (yes, I know how well that's worked before); the unions don't like it; and it's extra money- all of those things lead me to support these propositions. But I'm not really enthusiastic about it.

The ads opposing the compacts aren't all that persuasive to me, mainly because I don't understand the giving too much power to a handful of tribes argument. So, I went and looked at the supporters on both sides- the Yes group has 34 representatives/Indian groups/tribes on board, including tribes that do not have casinos (and receive Revenue Sharing fund money). The No group has 16 representatives/Indian groups/tribes (also opposing are my state senator, Leland Yee PhD, my state assemblywoman Fiona Ma, as well as Ess Eff Assessor Phil Ting and two members of the Board of Supervisors- Tom Ammiano and Chris Daly, ummmmmm. . .ok), including two tribes that currently pay $2 million each into the Revenue Sharing fund, and had their own amended compacts in 2004. What is that I smell? Ahhh, fear of competition.

One tribe that is a major donor to the No effort, the Pala, has a resort and spa that is billed on their website as "Southern California's Most Spectacular Playground™." The other, the United Auburn, operates a large Indian casino and resort near Sacramento. Both are the recipients of changes to their compacts in 2004 that, in the words of the Legislative Analyst Office, allows them "to operate an unlimited number of Class III slot machines in exchange for payments to the state General Fund for machines added after ratification of the compacts." According to the Pala amendment, they will pay an annual fee ranging from $12,000 per "gaming device" for 2,000 to 2,500 slot machines to $25,000 per gaming device for 4,500 or more slot machines. All of these funds go to the General Fund. The same language applies to United Auburn. Of course, the compacts that are being voted on in this election do not contain the same "unlimited" language. I'm not smart enough to run the numbers on which will pay the state more- percentage of revenue or fixed per machine rate? In any event, why am I not that surprised that the opposition hasn't brought up their desire to not have competition, instead they are using a blunt object over "fairnes," which is really only about which method of paying the state is better- percentage of net revenue or per machine charge. And I haven't even addressed the role of the race tracks. But, I don't think I need to.

Now, I'm more than willing to listen to reasons to oppose these compacts beyond no gambling ever and the misleading attacks from these competitors, but right now, I'm inclined to recommend a Yes on Props. 94, 95, 96 and 97.