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March 29, 2016
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April 5, 2016

Economist Joseph Kalt studies CPN impact in Oklahoma

Since the mid-1970s there has been a shift in federal Indian policy toward self-determination, which in general refers to the belief that Indian nations should determine their own futures.

Joseph P. Kalt, the Ford Foundation Professor (Emeritus) of International Political Economy at the John F. Kennedy School of Government at Harvard University, describes this opportunity as both political and organizational, saying it was “not simply a chance to start a business or exploit an economic niche, but an opportunity to substantially reshape the future for Indian tribes.”

With federal Indian policy moving in the right direction, tribes are tasked with asserting their sovereignty against the interests and resistance of state governments and other entities that make claims to tribal resources. Tribes must also have the ability to back up their assertions of self-governance with the ability to govern effectively.

The Citizen Potawatomi Nation has done this with a constitutional reform project in 2007. The reform expanded the legislative body to include representatives from across the United States; clearly defined the separation of governmental powers among the executive, legislative and judicial branches of government; and removed, wherever possible, the United States Secretary of the Interior from tribal governmental processes. Consistent tribal leadership has also benefited CPN.

While many tribal governments see turnover in the executive branch every two to four years, CPN has prospered under the leadership of Tribal Chairman John Barrett and Vice-Chairman Linda Capps.

While it might seem like an ordinary task for governments to draft constitutions or have elected leaders, the impact, both present and future for the Citizen Potawatomi Nation, will likely determine the very survival of the tribe. Professor Kalt has stated that sovereignty, nation-building and economic development go hand-inhand.

“Without sovereignty and nation-building,” he says, “economic development is likely to remain a frustratingly elusive dream.”

{jb_quoteleft}I believe the evidence I talk about in my report is clear that, in fact, the State of Oklahoma does not have any uncompensated burdens,” Kalt stated. “In fact, it’s benefiting from having a wealthy neighbor – or getting (a) wealthier neighbor that is producing its own GDP now, the Citizen Potawatomi Nation, that benefits the State of Oklahoma. And there’s no evidence that I can find that indicates that the state is suffering some uncompensated burden as a result of the tribe’s success in developing its own economy.{/jb_quoteleft}Through the Harvard Project (since at least 1987) and NNI (since 2001), Joseph Kalt has conducted extensive research and teaching on the economic social, and political development of American Indian reservations, as well as the political economy of Indian tribes, federal Indian policy, and tribal-state, county and municipal relations. Most recently, he put his expertise to practice and studied the impact of the Citizen Potawatomi Nation in Oklahoma. Once the federal  government and tribes realized that federal funding would be inadequate to serve the needs of tribes, the federal government began to formulate a policy which would allow tribal governments to take advantage of their unique status as sovereign nations.

The most profound policy developed from this revelation has been the Indian Gaming Regulatory Act, and more recently the HEARTH Act. Many tribes in Oklahoma use the money generated from their gaming enterprises to reinvest in tribal operations. Kalt has stated in his research that if tribes self-govern, they must possess the resources to do so. Citizen Potawatomi Nation has developed a diverse portfolio of enterprises, which offer a wide range and robust number of jobs that also strengthen the tribal economy.

“What the research keeps finding is that economic development, kind of solving of the social problems, even the strengthening of culture depends on the presence of stable and effective tribal government. Without it, everything else falls apart. You can’t hang onto a good language teacher; you can’t hang on to a good police chief if everything is chaos. And so tribes like Citizen Potawatomi are looked to as an example of what it means to put in place effective institutions of local self-governance under these federal policies of self-determination,” Kalt stated.

The Citizen Potawatomi Nation has become the economic engine of Pottawatomie County, creating 70 percent of new jobs and having an economic impact of more than $540 million annually. That success has drawn the attention of revenue shy local municipalities and the State of Oklahoma, which is facing a nearly $1 billion budget shortfall, leading to unwarranted grabs for tribal revenue. Kalt focused his research around that central question—who has the most interest in tribal revenue?

“I believe the evidence I talk about in my report is clear that, in fact, the State of Oklahoma does not have any uncompensated burdens,” Kalt stated. “In fact, it’s benefiting from having a wealthy neighbor – or getting (a) wealthier neighbor that is producing its own GDP now, the Citizen Potawatomi Nation, that benefits the State of Oklahoma. And there’s no evidence that I can find that indicates that the state is suffering some uncompensated burden as a result of the tribe’s success in developing its own economy.”

Still, the State of Oklahoma claims that it can place any burden it desires on the Citizen Potawatomi Nation,including imposing state sales tax at tribal owned  enterprises. According to Kalt, this action would ultimately put the State of Oklahoma and the Citizen Potawatomi Nation in a worse situation.

Read the latest update as arbitrator rules against the Oklahoma Tax Commission in its attempt to collect state sales tax on tribal trust land.

“The incremental additions that Citizen Potawatomi Nation has made, whether it hires 26 or 20 or 25 policemen, whether it provides 171,000 physician visits or only 169,000, the incremental additions that it is making generate because of who the employees are, and because of the taxes it already pays, generate more to the State of Oklahoma, as a whole, including the citizens, including tax revenues, all that together, than it takes in. So it’s got – it’s got a positive payoff at the margin. What that means is – what that means is, yes, any tax the State of Oklahoma imposes, which reduces the incremental contributions of the CPN, makes its
neighbor poorer, will tend to make Oklahoma poorer. Now, that’s of the facts of this situation. That’s not necessarily true everywhere. It’s just that you’re sitting next to the Citizen Potawatomi Nation,” Kalt stated.

What Kalt ultimately concluded in his research is that the federal and tribal interests overwhelm any arguable interests the State of Oklahoma would have in collecting tax at tribal businesses. In fact, Kalt says in his research that he can find no evidence that any burden placed on Oklahoma that is not directly or indirectly more than compensated for by direct payments from CPN for gaming, state income tax collections from the people that CPN directly and indirectly supports and the economic impact of the tribe.

“The imposition by the State of Oklahoma of the tax on CPN would be contrary to the United States’ federal interest in the economic self-sufficiency and effective self-government of federally-recognized tribes such as the Citizen Potawatomi Nation,” Kalt concluded.