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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Tribes to keep fuel taxes

Betsy Z. Russell Staff writer

BOISE – Legislation seeking to seize $3 million a year in gas tax revenues from Idaho’s Indian tribes was defeated in a deadlocked House committee Thursday after an emotional three-hour hearing.

Now, the state and the tribes will instead begin a year of negotiations on a fair way to split tax revenues from tribal reservation gas sales.

“The tough work is ahead of us,” said Rep. Joe Cannon, R-Blackfoot, a former sponsor of HB 661, who pulled his name off the bill and pushed for negotiations instead. “Neighboring states have agreements, and I want Idaho to have one, too. This is not the end of the road – this is the start.”

House Transportation Committee Chairwoman JoAn Wood, R-Rigby, urged her committee to support the bill. “History has shown that once this body goes home, the impetus to solve the problem goes away,” she said. “We do not look at this as a taking of any money from the tribes. … It’s fair that all fuel taxes legally belong to the state.”

At one time, at least some of Idaho’s tribes paid gas tax to the state for their reservation gas sales to non-tribal members, but then the state Tax Commission tried to go after them for tax on sales to their own members as well. The case went to court, and the state lost, with the Idaho Supreme Court ruling that the state can’t tax tribal gas sales on the reservation, whether the customers are tribal members or non-members. An appeal to the 9th U.S. Circuit Court of Appeals also went against the state.

A U.S. Supreme Court ruling in December in a Kansas case raised hopes for some that Idaho’s laws could be rejiggered to make a state gas tax on tribal sales constitutional. That’s what HB 661 attempted to do.

Tribal officials made it clear to the committee that if the bill were passed, it’d be challenged in court. “I can guarantee you it’s fraught with legal problems,” said Bill Bacon, attorney for the Shoshone-Bannock tribes.

Rep. Mary Lou Shepherd, D-Prichard, noted, “I don’t think the state has a real good record when we’re in court.”

Many of the bill’s backers, including representatives of non-tribal gas stations and convenience stores, said tribes should pay the same taxes they pay. “I’m just worried about everybody paying their share of taxes,” said Carl Ward, an eastern Idaho member of the Idaho Petroleum Marketers and Convenience Store Owners,

Coeur d’Alene tribal Chairman Chief Allan took offense. “I live in Kootenai County, I pay property tax,” he said. “I am a voter, I am a taxpayer of this state. I pay my tax at the pump as well.”

Idaho tribes collect their own tribal gas taxes and use them for tribal government purposes, from road maintenance to bus service to lake cleanup.

“If passed, HB 661 would threaten a vital source of revenue for my people,” Nez Perce Tribal Chairman Rebecca Miles told the committee.

Rep. Kathy Skippen, R-Emmett, said past unsuccessful litigation over reservation gas taxes has cost Idaho taxpayers $1.5 million, and she joined Cannon and every North Idaho member of the committee in voting against the bill. That led to a 7-7 tie, and the bill died.

The other committee members voting against the bill were Reps. Bob Nonini, R-Coeur d’Alene; Phil Hart, R-Athol; Shirley Ringo, D-Moscow; Mike Mitchell, D-Lewiston; and Shepherd.

Sen. Mike Jorgenson, R-Hayden Lake, chairman of the Idaho Council on Indian Affairs, spoke out against the bill. “It’s amazing to me that the state is so willing to enter into litigation, when there is the opportunity for negotiation,” he said. “We’re all neighbors and we’re all Idahoans. I ask you, I plead with you, just extend this for one year and give both sides the opportunity to work this out.”

After the vote, as happy tribal leaders, lawyers and legislators congratulated each other, Allan said, “I’m very thankful that they supported the Idaho taxpayers, saved them more dollars on litigation. As a taxpayer, I appreciate that.”