Tulalip Tribes may get portion of sales tax

Washington state and the Tulalip Tribes are nearing an agreement to share sales taxes collected in the Quil Ceda Village and elsewhere on the local reservation.

Officials from both have signed a memorandum of understanding on a plan that would split the tax funds up between the two groups.

State tax collections would be reduced by an estimated $4.3 million in 2022, the first full year of collections, and the Tulalip Tribes would receive those funds.

The only remaining step is for the state legislature to pass a bill that would authorize the state governor to enter into compacts with the Tribes.

Those bills, HB 2803 and SB 6601, are currently in committee in the state legislature.

The agreement would not affect the amount of money the county receives.

Tulalip officials have long sought a portion of the sales tax from businesses on their land.

“Our first tenant at the Quil Ceda Village was about 20 years ago, so that’s when we first started talking about this,” said Teri Gobin, chairwoman of the Tulalip Tribes.

The issue is about tribally-owned property on the reservation or trust land off the reservation. When those types of property are leased to a non-native individual and they sell to a non-native individual, the Tulalip Tribes does not receive any part of that sales tax.

“We’ve never seen a dollar of the sales taxes off of that property,” said Gobin.

The Tulalip Tribes have spent their money to build up much of the land around Quil Ceda Village.

“Every government receives taxes to run their government, except for Quil Ceda Village,” said Gobin. “The Tribes put out hard dollars for the infrastructure out there. For the roads, for a sewer plant."

Although the Tribes have the option to add taxes, they were reluctant to take that path.

“As tribes we are sovereign, so we have the right to tax on our property and on our lands, and so does the state. But to do that it would be double taxes,” she said.

The Tulalip Tribes did not want to add taxes on top of the existing state and county taxes, as that could depress sells and development, said Gobin.

Tulalip Tribes officials filed a case to argue for the sales tax in 2015 and lost the first round in federal court.

“We had our briefs ready to file in the Ninth Circuit [Court] and we were prepared to go to the Supreme Court,” said Gobin.

“So, the state attorney general reached back to us, and asked us to go back into mediation,” she said.

One of the big problems was that due to the legal understanding of state law, it seemed as if the case would end with Tulalip or the state receiving all of the money and the other receiving nothing.

“So, if we went through the court, one of us was going to be a full loser and one was going to be a full winner,” said Gobin.

The state also hoped to reach an agreement to avoid uncertainty with their funding.

“Litigation is never certain, by reaching an agreement there is an assurance of the outcome and certainty for all parties,” said Mikhail Carpenter, communications manager at the Washington State Department of Revenue.

“Compacts have resolved many issues on cigarettes, fuel, marijuana, and are good for relations,” he said.

Gobin agreed that avoiding further litigation was preferred, as moving to the Ninth Circuit Court or eventually the Supreme Court would have taken more years and likely millions of dollars to resolve the case.

The compromise also provided both parties with security for the future, assuming the current legislature bills pass.

“Passage of the bill protects the state and local governments from future lawsuits while assuring the Tribes they will receive a portion of the tax revenues that are generated from activities on their lands,” said Carpenter.

Rep. June Robinson, who represents the 38th District which includes Tulalip and who is a co-sponsor of the house bill, said she believes the bill will be approved this session.

“I am optimistic that this will pass,” she said. “I think there is a good understanding of the necessity to pass this.”

Robinson said the agreement will help settle the issue and allow both parties to better plan their future budgets.

“I think it’s a fair settlement for both the Tribes and the state,” she said. “We can put the issue behind us now.”

Gobin agreed that it was a fair compromise.

“It was give and take on both sides and we came up with a settlement we could both live with,” she said.

“It resolves the issue, and moving forward, other tribes would have a pathway to do compacts with the state as well,” she said.

As part of the agreement, the Tulalip Tribes have agreed to support the building of a mental health facility in the county as well.

“We, the state, receive less revenue than we have in the past,” said Robinson. “However, we’re also getting a big asset with the siting and the building of a mental health hospital."

The Tulalip Tribes have agreed to site and build the $35 million facility, while the state will run the hospital.

Gobin said that the Tribes have properties all over the county, so they are not sure where they will plan to build it yet, although she said it will be built in Snohomish County.

For the Tulalip Tribes, they will begin to see more funds coming back from their investments around Quil Ceda Village, possibly as soon as 2021.

If the agreement is enacted they will receive the first $500,000 sales tax and receive 25 percent of revenue after that.

If the Tribes have made a “qualified capital investment” to the area around the business, then that number goes up to 50 percent for existing businesses and 60 percent for future businesses.

Gobin said that the tax funds that the decision could bring to Tulalip will be put back into the community.

“We have shortfalls in our healthcare, in our housing, in education,” she said.

“To keep our people healthy and in a good way there’s all kinds of things that can be developed here,” she said.