Tahlequah Daily Press

January 24, 2014

Compacting facts

Cherokee Nation officials, citizens discuss tribe’s ‘deals’ with state

Staff Writer

TAHLEQUAH — Area residents who live in the 14-county jurisdiction of the Cherokee Nation have likely heard the term “compact,” particularly if they frequent tribal smoke shops in the area.

While tribal citizens understand they pay less for Cherokee Nation tags and tobacco users also enjoy paying less than if they bought retail, few may know exactly what a “compact” is.

“The simple definition of a compact is that it’s an agreement between two sovereigns – for instance, the Cherokee Nation and the state of Oklahoma – that makes a situation that could be cumbersome more seamless,” said Cherokee Nation Attorney General Todd Hembree. “They often involve very particular rights of Native Americans and the state of Oklahoma. When we agree to a compact, we agree to either do certain things or forego certain things that allow the two parties to work together better.”

Hembree said that right now, the Cherokee Nation holds four compacts with the state: a tobacco product sale compact, a gaming compact, a motor vehicle license compact and a motor fuels compact. He pointed out the benefits to the general public and the citizenry are specific to the individual compact.

“Probably the best example of how a compact works is the tobacco issue,” said Hembree. “We are allowed under federal law to sell tobacco to our citizens without any tax whatsoever. But in order to do that, it would require smoke shop owners to check every single customer and validate tribal citizenship, or the state of Oklahoma to post a law enforcement officer outside each tribal tobacco business, which is obviously cumbersome.”

In signing the tobacco compact, the Cherokee Nation is allowed to sell to everyone – citizens and non-citizens – at the state rate, but the tribe receives a rebate to compensate for charging tax.

“That allows the smoke shop owner to sell products to everyone, and they a 70 percent rebate on the tax, which is a good deal,” said Hembree.

In November, the CN signed two new compact with the state, one involving car tags and a 10-year tobacco agreement.

The new tobacco compact enables smoke shop owners to be more competitive in the market, generating more tax revenue for Cherokee Nation. The state of Oklahoma now also collects 100 percent of its share of tobacco tax revenue up front. There are about 50 licensed tobacco retailers within the tribe’s 14-county jurisdiction.

The new car tag compact allows Cherokee citizens living in all 77 counties of Oklahoma to buy a CN license plate. Previously, the compact only provided purchase for citizens living within the tribe’s jurisdiction.

“We have two benefits with the car tag compact,” said Hembree. “The first is it allows us to tie in with the state motor vehicle system. Law enforcement or the state sees a Cherokee Nation tag and knows its a valid entity. But the major benefit is that we are able to sell those tags to citizens at a much-reduced rate.”

Sovereignty is a key issue

The Cherokee Nation is a sovereign tribal government, and it provides all the same services state and federal governments provide. The tribe administers government programs for housing, health care, education and other social services.

As a government, the tribe also operates a tax commission, levying taxes on its citizens in the form of licenses plates and other goods or services. Within the 14-county jurisdiction, 38 percent of tax revenues from the sale of tribal car tags goes directly to about 90 public school districts each year, with $3.2 million awarded last April.

With the compacts, it will now help even more school districts in Wagoner, Tulsa, Muskogee, Rogers and Mayes counties. Outside the 14-county jurisdiction, revenue from the sale of vehicle tags will be distributed to schools, local and county governments in the same manner as state tags.

Principal Chief Bill John Baker believes compacts provides a multitude of benefits.

“Our abilities to successfully compact with the state and the benefits are apparent in the Cherokee Nation’s car tag compacts, which, since 2001, have translated to a financial commitment of about $30 million to area schools. That money will help our sons, daughters and our grandchildren by providing extra classroom supplies, new technology or the salary of a teacher. Our local schools benefit from these agreements and the Cherokee Nation’s true government-to-government relationship with the state of Oklahoma.”

Sharon Swepston, Cherokee Nation Tax Commission administrator, pointed out tax revenues also help in other areas.

“Twenty percent of the gross [car tag] revenue goes back to roads and bridges in our jurisdiction,” said Swepston. “And 20 percent of the net revenue is distributed to law enforcement agencies.”

The balance of the revenue goes to pay the minimal operating costs for the tribe’s five tag offices.

When Baker signed the agreement with Gov. Mary Fallin, she commented on the relationship between the state and the tribe.

“[The] agreement is a product of a good working relationship and a mutual respect between the Cherokee Nation and the state of Oklahoma,” Fallin said. “In the spirit of that partnership, this new compact ensures that revenues from Cherokee Nation car tags are split between the Cherokees and state and local governments. Local schools, county roads, and other important priorities will benefit from this agreement. My thanks go out to Chief Baker for working with the state and with my office on this important issue.”

Not all tribal citizens believe compacts are a good deal for the tribe.

“I think one of the most important aspects of compacts is how they diminish our sovereignty,” said David Cornsilk, a Cherokee citizen who has studied this and other issues related to tribal sovereignty and operations. “Cherokee Nation leaders have long argued a compact is an exercise of sovereignty because it is government-to-government. But the bargaining is not between equals. In my opinion, compacts are more like extortion. We have to pay the neighborhood bully a cut to do business, very much like the mafia extorts money from the mom and pop businesses. There also is no reciprocity. The state claims a share of our money, but does not sign a compact with a tribe to share their money.”