States, counties watch Indian taxation case

WASHINGTON (AP) — State and county officials worry that a Minnesota case before the Supreme Court could allow American Indian tribes to buy up valuable land and take it off local tax rolls without federal approval.
The case involves a dispute between Cass County, Minn., over taxes on land the Leech Lake Band of Chippewa bought for a casino and other uses. The court hears oral arguments in the case on Tuesday.
If the county loses, local officials say tribes could refuse to pay taxes on land without going through the cumbersome process of putting it under trust with the Interior Department.
“That would have some severe economic impacts for local units of government where Indian reservations are located,” said David Oberfeld, a county commissioner in Mille Lacs County, Minn.
The Interior Department considers the effect on local tax rolls before taking Indian land into trust.
The Mille Lacs Band of Chippewa, which has been using cash from its booming casinos to buy land for housing and other tribal needs, paid $240,000 in property taxes under protest last year in Mille Lacs County. The tribe contends the land is tax-exempt even if it isn’t put into trust.
Thirteen states, including Minnesota and South Dakota, and more than a dozen county governments have filed arguments with the Supreme Court backing Cass County. The Justice Department has sided with the Leech Lake band, along with numerous other tribes around the country.
Tribes argue that their right to govern themselves is at stake. One government can’t tax another, they say.
“To allow the county a measure of sovereignty over the band’s land is to thwart Congress’ policy of self-determination for Indian tribes,” argued the National Congress of American Indians.
The Leech Lake reservation in northern Minnesota was created during the mid-1800s in a series of treaties under which the federal government agreed to hold the land in trust for the tribe.
But under an 1889 law, which was part of a national effort to assimilate Indians into white culture, much of the reservation was carved up and given to individual tribal members or sold to the public.
The case involves 21 parcels of such land that the tribe started buying in the 1980s. Cass County imposed a property tax on the land in 1993. The tribe challenged the county but paid $64,000 in taxes, interest and penalties under protest to avoid foreclosure.
A federal judge ruled in favor of the county, saying tribal land was taxable if it wasn’t held in trust by the government or its sale was not otherwise restricted.
The 8th U.S. Circuit Court of Appeals decided that some of the land was taxable and some wasn’t. The 13 parcels originally given to tribal members was conveyed under legislation that clearly made it taxable, the court said. The other eight parcels were sold to non-Indian owners under a different provision that didn’t specify that the land was taxable.
The Supreme Court has never allowed a state to tax a tribe unless Congress “authorized the tax with unmistakable clarity,” according to the Justice Department.