New Qs For California Tribal Cash Distribution Fund

as posted 7.12.07 by KQED's John Myers at Capitol Notes :

A new analysis by the state auditor suggests that the payments made by gambling tribes into a special fund for local governments may not always be used the way they're supposed to be.

State Auditor Elaine Howle's report focuses on what's known as the Special Distribution Fund, a fund created by the enactment of the original 1999 Indian casino compacts. Those compacts required tribes to pay a portion of their proceeds into the SDF for projects to mitigate the community impacts of tribal casinos.

But Howle's audit (which focuses on the 2005-06 fiscal year) found that in some instances, local governments don't appear to be using the cash for actual casino mitigation. One example comes from Sonoma County, where she says $52,000 in SDF money was used to buy surveillance cameras at Healdsburg Hospital.

"Although the hospital claimed it experienced several acts of vandalism in its parking areas and other disturbances," wrote Howle, "it could not provide evidence showing that those incidents were related to the [nearby] casino or that the number of criminal incidents on its property had increased since the casino was built."

Howle says there were other grants -- totaling about $2.3 million -- that might have been tangentially related to impacts from a nearby Indian casino, but not directly related. Even so, she says none of this is illegal because existing law isn't specific enough about how SDF money is used. She suggests that legislators make it clear that the money must be used to mitigate actual casino impacts.

The state auditor also chronicles what sounds like a case of double dipping. Tribes that renegotiated their casino compacts in recent years no longer have to pay into the SDF, and instead now must negotiate directly with local governments to pay for mitigation. And yet, says the auditor, some of these counties are still getting money from the SDF... a total of $850,000 in the 2005-06 fiscal year... even though that money ostensibly should go to communities that don't have a means of negotiating directly with gaming tribes. Again, it's not that they're breaking the law, says Howle... but rather that the existing law doesn't specify this to be a no-no.

If that's not enough to leave your head spinning, then consider one final finding from the newly released audit: the Special Distribution Fund could run out of money.

Why? Well, says Howle, the revised casino deals struck in recent years between the big gaming tribes and Governor Schwarzenegger generally require those tribes to share their revenues with the state's general fund; in exchange, those tribes can stop paying money into the SDF. She estimates that will eventually mean a decrease in SDF cash of $92 million a year.

And because the SDF is used not only for gambling mitigation... but also to make up any shortfalls in a separate program that sends money to impoverished tribes... Howle says it's very likely that the SDF is going to get squeezed for cash.

The audit is here.