Here’s a kind of story that rarely gets reported without a specific combination of expert industry and legal knowledge and a nose for news: In Washington State, the government is passing along gas taxes to Native American tribes, on whose land the residents do not pay gas taxes. At least some of the $89 million transferred since 2007 hasn’t been spent on transportation. Which is against the state constitution.
The state’s residents know this in part because of an opinion article in the Seattle Times by Tim Hamilton, an independent oil analyst who has regularly consulted for OilWatchdog. Because he knows the oil and gasoline businesses inside out, he knew about the state’s settlement with its tribes–and that the gas tax money was intended for transportation projects. He knows and tracks the state laws having to do with energy. And he knows how write it up and dial a newspaper editor.
Hamilton said:
IT is not uncommon for the members of the Legislature to pass a bill that comes back to haunt them and the citizens due to “unintended consequences.”
Perhaps the best example is a bill passed in 2007 that has resulted in the state sending nearly $90 million from the state’s motor-vehicle fund to Native American tribes that never paid the fuel taxes in the first place.
The state and the tribes had a long-running dispute over collection of such taxes from tribal-operated stations. A federal judge’s 2006 ruling prohibited the state from collecting fuel taxes at the pumps on reservations.
Shortly after that decision, the U.S. Supreme Court ruled that states could collect taxes for fuel sold on reservations if the taxes were collected before the fuel reached the reservation. In response, the Legislature passed a bill in 2007 moving the collection of the tax to wholesalers off the reservations. Logically, that should have ended the dispute.
In the same law, legislators gave vague authority to the governor to enter into “compacts” with the tribes to resolve any further disputes, even though the new tax structure effectively rendered such disputes moot. The governor quickly used the authority in the bill to negotiate compacts in closed-door meetings with tribal representatives.
The governor agreed to pay the tribes “refunds” of 75 percent of the taxes previously paid by nontribal entities prior to the fuel arriving at the reservation. The tribes promised to use the money on transportation projects but have since voluntarily identified that these funds are often diverted to non-transportation purposes.
This violates the 18th Amendment to our state constitution, which requires all motor-fuel tax proceeds to be used exclusively on highway purposes. Even worse, any audits showing where the tribes spend this money are exempt from public-disclosure laws.
Who knows if something similar is happening in other states facing painful service cuts and impossible budgets? Who’s ever going to know?
Hamilton also represents service station dealers, who have an interest in whether, for instance, the tribal leaders could be funneling state money to on-reservation service stations, allowing them to substantially undercut non-reservation retailers. But that’s not part of his argument here–he’s calling out an expensive deal that was made in haste and in private, and seems like it’s not in the interest of the state.
