Taxation on Indian reservations and other issues before the Revenue Oversight Committee : a report to the 53rd Legislature from the Revenue Oversight Committee ; prepared by Connie Erickson, Jeff Martin

80 Pages·1992·1.6 MB·English

by  Erickson, Connie F

Ericksont Connie F
328.J Taxation on
Ll3rtir Indian
1992 reservations and
other issues
before the Revenue
Oversight
TAXATION ON INDIAN RESERVATIONS
AND OTHER ISSUES BEFORE THE
REVENUE OVERSIGHT COMMITTEE
STATE DOCU?iIENTS COLLECTIOn
JAN 1 '. 1993
MONTANA STATE LIBRARY
1515 E. 6th AVE.
HELENA, MONTANA 59520
A
Report to the 53rd Legislature
November 1992
Published by
Montana Legislative Councii
Montana Legislative Council
State Capitol, Room 138
Helena, Montana 59620
[phone]
FAX: [phone]
MONTANASTATELIBRARY
3 0864 00081652 3
TAXATION ON INDIAN RESERVATIONS
AND OTHER ISSUES BEFORE THE
REVENUE OVERSIGHT COMMITTEE
A
Report to the 53rd Legislature
from the
REVENUE OVERSIGHT COMMITTEE
Prepared by
Connie Erickson, Staff Researcher
Jeff Martin, Staff Researcher
November 1992
Published by
Montana Legislative Council
Room 138, State Capitol
Helena MT 59621
[phone]

MEMBERSHIP:
REVENUE OVERSIGHT COMMITTEE
Senator Dorothy Eck, Vice Chair Representative Bob Gilbert, Chairman
Senator Robert Brown Representative Mike Foster
Senator Bruce Crippen Representative Marian W. Hanson
Senator Thomas Hager Representative Dan Harrington
Senator Thomas Towe Representative Robert Ream
Senator Fred Van Valkenburg Representative Ted Schye
MONTANA LEGISLATIVE COUNCIL
Representative William T. (Red) Menahan, Chairman
Robert B. Person, Executive Director
David D. Bohyer, Director, Research and Reference Division
Gregory J. Petesch, Director, Legal Division
COMMITTEE STAFF
Jeff Martin, Staff Researcher
Lee Heiman, Staff Attorney
Jill Rohyans, Secretary
Lois O'Connor, Secretary

TABLE OF CONTENTS
PREFACE
ii
HOUSE JOINT RESOLUTION NUMBER 53
iii
CHAPTER ONE
1
INTRODUCTION
1
BACKGROUND 2
FEDERAL TAXATION 2
STATE TAXATION 4
TRIBAL TAXATION 5
PROVISION OF GOVERNMENT SERVICES 6
Education 8
Health 9
Social Services 10
STATE-TRIBAL TAXATION AGREEMENTS 10
South Dakota 11
Minnesota 12
Oregon 13
STATE-TRIBAL NEGOTIATIONS IN MONTANA 14
Fort Peck Tribes 14
Other Tribes 17
PROPOSED LEGISLATION 18
SUMMARY 19
APPENDICES
APPENDIX A 21
. .
APPENDIX B 23
APPENDIX C 25
APPENDIX D 27
CHAPTER TWO 29
MONITORING REVENUE COLLECTIONS 29
STATE AND AGENCY LIQUOR STORES 36
PROPERTY TAX ISSUES 39
Valuation of Heavy Equipment 39
Negotiated Railroad Property Tax Settlements 39
OIL AND GAS ROYALTY INTEREST TO WORKING INTEREST 41
. .
PREFACE
This document is the third of three reports from the Revenue Oversight
Committee to the 53rd Legislature.* It is divided into two unrelated
chapters. Chapter One is the final report from the study mandated by House
Joint Resolution No. 53. This resolution, passed by the 1991 Legislature,
requested that the Revenue Oversight Committee conduct an interim study
of all aspects of taxation on Indian reservations. Chapter One examines
issues related to federal, state, and tribal taxation on Indian reservations in
Montana; describes the provision of governmental services on reservations;
and summarizes the resolution of state-tribal tax conflicts through
cooperative agreements.
Chapter Two discusses a limited number of issues that came before the
Revenue Oversight Committee during the 1991-92 interim that were
unrelated to the conduct of formally structured studies. These issues
include the monitoring of state revenue collections as part of the
Committee's revenue estimating responsibilities; the Montana Department of
Revenue's policy regarding the solicitation of bids for agency liquor stores;
negotiated property tax settlements between the Department and railroads;
the Department's valuation of heavy equipment; and the change in
ownership interests on oil and gas leases as a result of the imposition of the
local government severance tax in lieu of taxation based on net proceeds.
The other two reports are An Overview of Taxation in Montana: Principles and Practice
and Senate Bill No. 226: The Taxation of Retirement Income in the Wake of Davis v. Michigan.
HOUSE JOINT RESOLUTION NUMBER 53
A JOINT RESOLUTION OF THE SENATE AND THE HOUSE OF
REPRESENTATIVES OF THE STATE OF MONTANA REQUESTING THAT THE
REVENUE OVERSIGHT COMMITTEE CONDUCT AN INTERIM STUDY OF ALL
ASPECTS OF FEDERAL, STATE, LOCAL, AND TRIBAL TAXATION ON
INDIAN RESERVATIONS, INCLUDING BUT NOT LIMITED TO INCOME,
PROPERTY, NATURAL RESOURCE, SELECTIVE SALES, EXCISE, AND
OTHER TAXES; AND REQUIRING A REPORT OF THE FINDINGS OF THE
STUDY, WITH ANY RECOMMENDATIONS BY THE COMMITTEE, TO THE
53RD LEGISLATURE.
WHEREAS, as stated in the first sentence of the introduction to a
January 1990 report entitled "Taxation on Montana Indian Reservations",
prepared for the Committee on Indian Affairs by the Committee's staff,
"taxation has become one of the most controversial issues in Indian affairs";
and
WHEREAS, as further stated in the introduction to that report,
economic development on reservations; growing demands for state, local,
and tribal services by the reservations; the increasing difficulty of raising
state and local taxes; the apparent federal government policy to encourage
tribes to assume a greater share of the administrative responsibility and cost
of reservation services; and other matters have all combined to make the
subject of taxation on Indian reservations evermore important, complex, and
perplexing; and
WHEREAS, Senate Bill No. 15 exempts from the resource indemnity
trust tax oil and gas royalties received by an Indian tribe or by the United
States as trustee for individual Indians; and
WHEREAS, Senate Bill No. 428 provides for the allocation of motor
fuels tax to tribal governments that enact motor fuels taxes at rates that are
identical to the rates imposed by the state; and
III
WHEREAS, Senate Bill No. 464 provides for the allocation of tax from
oil and natural gas produced on a reservation to tribal governments that
enact a tax identical to the state severance tax or resource indemnity trust
tax; and
WHEREAS, the above three bills were controversial; and
WHEREAS, bill drafts were requested urging the United States
Congress to resolve tribal taxation issues and revising cigarette taxation on
Indian reservations; and
WHEREAS, the taxation authority (and limits on that authority) of the
tribes and of the federal, state, and local governments and the interrelated
provision of services and funding for such services by the federal, state,
local, and tribal governments are issues of serious concern to those
governments and their constituents.
NOW, THEREFORE, BE IT RESOLVED BY THE SENATE AND THE HOUSE OF
REPRESENTATIVES OF THE STATE OF MONTANA:
That the Revenue Oversight Committee conduct an interim study of
all aspects of federal, state, local, and tribal taxation on Indian reservations,
including but not limited to income, property, natural resource, selective
sales, excise, and other taxes, and report its findings, with any
recommendations of the Committee, to the 53rd Legislature.
Approved April 23, 1991.
IV