The patchwork pattern of reservation lands in Montana today is the product of treaty violations and intentional efforts made by the federal government to break up tribal governments, get rid of reservations, and assimilate American Indians into non-Indian society – efforts all rooted in racism.
House Bill 401, sponsored by Rep. Greg Hertz, perpetuates those efforts under the guise of tax policy by imposing property taxes on certain tribal lands that are currently tax-exempt. Today, March 13th, the House Taxation Committee will hear testimony that supports and opposes this bill.
What Is House Bill 401?
House Bill 401 would repeal Senate Bill 412, which the 2011 Montana Legislature passed with overwhelming bipartisan support. Senate Bill 412 created the temporary tribal property tax exemption (for up to five years) for tribal fee lands when those lands have a trust application pending with the federal government. The need for tribes to go through this process stems from racist policies and practices and colonization.
Rep. Hertz and fellow supporters of House Bill 401 argue that local communities are missing out on much-needed revenue because of the temporary tax exemption. Yet, House Bill 401 is projected to generate little more than $125,000 for the state General Fund across over the next four years, or less than one-half of one percent of property taxes collected by the state in the last year, a paltry sum to undermine the political status of tribal nations.
House Bill 401 Undermines Tribal Sovereignty
By imposing taxes on tribal fee land, House Bill 401 ultimately places a greater burden on tribes when they seek to reclaim land stolen under allotment, potentially delaying the process altogether and upholding the practice that sought to destroy tribal communities.
Between 1887 and 1934, under the General Allotment Act of 1887, Congress divided reservation lands into individual parcels, gave each tribal member or household a parcel, and sold surplus parcels to non-Indians. In total, the U.S. government took more than 90 million acres (roughly the size of present-day Montana) from tribes and sold it to settlers, often without compensating tribes. As intended, allotment hurt tribal economies, cultures, governments, and the overall well-being of American Indians.
Because of allotment, reservations in Montana are made up largely of fee land and trust land, which is central to the issue today. Fee land is generally private property and can be owned by tribes, individual American Indians, or non-Indians; and is subject to property taxes. Trust land is land collectively owned by a tribe, as well as land allotted to individual tribal members; is held in trust by the federal government; and is exempt from property taxes.
In 1934, Congress passed the Indian Reorganization Act (IRA) in an attempt to right the wrongs of allotment. Under the IRA, tribes and the federal government can place land in trust to protect and restore tribal homelands, and to conserve and develop tribal lands, resources, and economies. This is key to tribal sovereignty, or the authority to self-govern. However, placing land in trust can be both a lengthy and costly process for tribes to undertake. The 2011 Legislature passed Senate Bill 412 to recognize that one government did not want to tax another while the wheels of the federal government turned slowly.
House Bill 401 Disregards the Political Status of Tribal Nations
In Montana, property that is owned by federal, state, and local governments is tax-exempt. House Bill 401 targets land owned by tribal governments, disregarding and dishonoring the government-to-government relationship and political status of tribal nations as sovereign.
Neighboring states honor this relationship. Oregon, for example, exempts tribal lands from property taxes when a fee-to-trust application is pending. Even Idaho exempts property on a reservation belonging to a federally recognized tribe from property taxes altogether, in an effort to treat all government properties the same, whether federal, state, county, or tribal.
Placing Land in Trust Is Good for the Economy
House Bill 401 undermines tribal economic development and redirects tribes from funding services in tribal communities that benefit both American Indians and non-Indians.
Tribes and the state benefit in many ways from placing land into trust. One way comes simply from reconnecting fragmented tribal lands, which allows tribes to more strategically invest in their economies. This is good for all of Montana.
The act of reconnecting lands allows tribes to be more flexible in negotiating leases, creating business opportunities, and identifying natural resource development and commerce opportunities. The Reno-Sparks Indian Colony of Nevada (RSIC), for example, transferred fee land into trust to develop several major car dealerships, a Wal-Mart Superstore, and a tribal health center – major economic development activities.
Tribal communities play an important role in moving the state forward by growing our shared economies for our shared communities. When tribal communities are better able to invest in economic development activities, the benefits ripple out to regional economies and the state economy.
House Bill 401 Is Bad for Montana
Although it was recognized as bad policy long ago, tribes continue to feel the impacts of allotment. Taking land into trust can address those negative effects, but House Bill 401 seeks to undermine those efforts and penalize tribes for protecting and restoring once-stolen tribal lands.
As it did by passing Senate Bill 412 in 2011, the Montana Legislature should honor tribal sovereignty and vote down House Bill 401.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.