Kayenta Township

Honoring Nations: Mary Etsitty: The Navajo Nation Sales Tax

Harvard Project on American Indian Economic Development

Mary Etsitty, Former Executive Director of the Office of the Navajo Tax Commission, discusses how and why the Navajo Nation sales tax was established, and how the Office of the Navajo Tax Commission works to consult and educate Navajo citizens about the need for -- and benefits of -- generating governmental revenue through a sales tax.

Native Nations
Resource Type

Etsitty, Mary. "The Navajo Nations Sales Tax." Honoring Nations symposium. Harvard Project on American Indian Economic Development, John F. Kennedy School of Government, Harvard University. Cambridge, Massachusetts. September 27-28, 2007. Presentation.

Michael Lipsky:

"And our final speaker will be Mary Etsitty, the Executive Director of the Office of the Navajo Tax Commission."

Mary Etsitty:

"Yá'át'ééh. Good morning. My name is Mary Etsitty and I'm Diné from the Navajo Nation. So, greetings from Navajo land. I'm actually from Arizona; the Navajo Nation is also partly in New Mexico and Utah. I'm here today as a representative from the Office of the Navajo Tax Commission. In 2005, we were an honoree from the Honoring Nations and [I'd] just like to thank the committee here again for that honor. It was very special to us and I'd like to thank Amy [Besaw Medford] for inviting me to be here today. This is a very wonderful experience.

We were given our award in 2005 because of our sales tax. The Navajo Nation has actually had taxes for many years. Back in the 1970s is when we initiated our tax program. We were not successful in collecting taxes until about 1985 when we had a Supreme Court case, Kerr McGee vs. the Navajo Nation. So ever since 1985 our office has just been going full force in collecting taxes. Last year, we collected a total of $85 million for the year, and although the overall budget of the Navajo Nation is greater than that, we're just striving to get to the point where we are basically sustaining ourselves. We do have seven taxes right now. Our original five taxes are based almost solely on the natural-resource industry because Navajo Land has coal mines, we have oil and gas leases, we have pipeline property, we have electric generation, and we collect a lot of money in royalties and taxes from that type of industry. But what happened in the late 90s is, we had a leader at the time whose name was Kelsey Begaye, and he was kind of looking into the future for us. And he said, ‘You know, we're not always going to be able to sustain ourselves on natural resources so we need to look at other areas for generating revenue.' So he encouraged our office to start looking into some other taxes, and that's when we looked into fuel excise tax and the sales tax.

We have actually always been taxed on fuel except before 1999, the states of Arizona, Utah, New Mexico were collecting those taxes and it was not coming back to the Navajo Nation. So we adopted our fuel excise tax and there's a credit we have against the states. So we collect our own money on the Navajo Nation and the states, in some circumstances, they give us refunds. We kind of work it all out with them and we have very good relations with the states at this point. And so that was our fuel excise tax. And then right after that was our sales tax that we initiated. And with these two most recent taxes, the leaders within Navajo, they knew that what was going to happen, ultimately, is these taxes -- fuel, excise and sales tax -- were eventually going to come down to the Navajo people. Although technically legally the burden is not on the buyers, that's how our sales tax is set up. It's on the sellers, and for the fuel it's on the distributors, but they do ultimately pass it down to the consumers, the Navajo people.

And so our leaders back in this time thought, ‘We need to know what the Navajo people think.' And actually, the executive director of our office, at the time, kind of foresaw this as well and he -- just from the beginning of our fuel excise tax and our sales tax -- he sent us all out. I was working as a staff in the office at the time and he literally sent all of us out into the field. The Navajo Nation is approximately 27,000 square feet; it's a very big reservation. Oh, I'm sorry. I always say that. I'm sorry. I always say square feet. [27,000] square miles. Anyway, so we're pretty big. And there's only like 20 of us in the office and so we all get sent out to talk to the public, to hold these public forums, and find out what the Navajo people think about taxes; and so we did this for our fuel tax, and then later on, for our sales tax. And what we found out was that, within Navajo land, many of the people were in favor of being taxed. They really didn't mind. They said, ‘I think we should contribute to the government as long as we're going to benefit and our communities are going to get this money.' So it was actually kind of good to hear that from the people. Although, when we would talk to the business owners it was a little bit different. They were not real happy about it. But, in general, the people were. So that kind of helped us to move along our effort and keep pursuing the sales tax. And these public forums that we held helped us to structure our sales tax and it told us that we need to get the money back to the communities. That's what the Navajo people want.

And so what we did was -- we kind of compiled this report that said we went out and talked to as many Navajos as we could, as many people that live on the Navajo Nation, and they want the money to go back to their communities. So the executive director of Tax Commission at the time -- he's an attorney, also, so he was able to get all this legislation together and structured it so that the money that comes from retail establishments within the Navajo Nation will go back to that area. There's kind of some calculations that you have to go through but the money is there for the chapters. We call them chapters with the Navajo Nation because we are so big; we're split up into 110 chapters. Chapters are kind of like the local areas where people go to get information about the government. So the money does go back. And it's not real specific at this time how it gets spent, but it's supposed to be spent on government purposes. Another thing about our public forums is that I think, at the same time, Kayenta Township was also becoming very noticed because of their sales tax initiative. So I think people on Navajo Nation saw that as a very positive thing and so they were in favor of Navajo Nation sales tax. Our sales tax rate is at three, or it was at three percent for the first few years. And what we did was we studied the sales tax rates of the surrounding communities around the Navajo Nation and we kept our rate relatively low compared to some of the border towns around the Navajo Nation. And surprisingly, people on the Navajo Nation didn't really, it didn't really affect them when we started our sales tax. I would talk to people just in the public and ask them, is it changing your spending habits and they all said, 'No.'

Most recently, within the last year, our judicial committee from our legislative body decided that they needed more money to build more courts and more jails. So they said, 'Let's try to get some of the sales tax money.' And so what they proposed was to increase our rate to four percent and then to keep that additional, or to keep 25 percent of it, which would essentially be that extra one percent. And so the judicial committee, judicial and public safety committee, they wanted to do this. And so they brought it before the overall Navajo legislative body. And the first time they approached our council, our council said, ‘No, we need to know what the Navajo Nation people think. It's going to affect them, ultimately.' So they pretty much sent the judicial committee out to do what our office had done originally, which was go out and hold public forums and find out what the Navajo Nation people think. So within the last year, I assisted the judicial committee and the public safety committee and we essentially did the same thing. We scheduled forums at some of the chapters within the Navajo Nation and we met with residents and basically informed them of some of the needs of the judicial branch and the public safety branch of the Navajo Nation, and asked them what they thought about us increasing the rate and having that money go to those specific activities. And again, Navajo people were in favor of it. They said, 'Why not increase it [to] two percent instead of just one percent.' So they were again, they liked the idea. They said, 'As long as we know that our money is going to go to a good cause and it's going to help people in general, then we are for it.' So once we compiled all that information again, [we] went back to the overall legislative body and explained to them what we had found out by talking to the people. And then it passed. So as of July 1st of this year [2007], our sales tax rate is now four percent and that extra [one] percent is going into a special fund to supplement our judicial and public safety facilities.

As of right now, we really haven't gotten any negative feedback or negative comments on it so it's going very well. The way our sales tax is set up, it actually, we have a range that we can go between two and six percent. That's the way our sales tax statute is written. So I think in the future, we're probably going to have more offices and other legislators coming to us and saying, ‘Let's increase it some more.' As far as I know, right now, Navajo people are generally in favor of it. Their main concern is just, ‘Let's make sure the money is spent well.' That's one area that -- it's kind of out of the hands of my office, as far as how money is spent. We really just concentrate on generating revenue, bringing in revenue and making sure our taxpayers are filing and paying the correct amounts. But it would be very good overall for our government to show how tax money is being spent. So with our sales tax money, some of it does go back to the communities. And with our fuel tax, that all goes into a roads fund that the Navajo Nation Department of Transportation oversees. Again, people in general are in favor of that because they know where it's going, they see where it's going, and it's going to help them, ultimately.

So that's kind of the Office of Navajo Tax Commission's story of civic engagement. Is -- we kind of have no choice but to go out there and talk to people because people, in general, in Indian Country, they just are not familiar with taxes at all. I'm not sure, but I think Navajo Nation probably has one of the most extensive tribal tax programs at this time. We try to help out other communities and other tribes that want to set up their taxes. We've made it a point, ever since our sales tax, within my office, to go out and educate people, especially people on the Navajo Nation. Before our sales tax, a lot of people didn't even know that we had taxes because it never came down to them to pay anything. We've really been educating people. Every time we are asked to do a presentation, we go out and explain all of our taxes as much as we can.

One of the things that we've started doing also is, every year -- I'm not sure how it is here, but out in the west we have fairs, have rodeos and the whole big parade and all that stuff. So every year now, during fair season, we put together surveys and we go out and we talk with people and get information from them and try to educate them at the same time. A lot of them are very glad to hear what the Navajo Nation is doing as far as taxes. And again, a lot of them are in favor of it. That's always a good thing for us [because] we're used to being not really liked by business people. We're not always the most popular people at meetings and stuff like that. So that's what we've been doing and I just wanted to show -- this year what we did was we found this really cool promo item and it has our logo; we have a logo called Buy Navajo. And this is actually another interesting story. About three or four years ago, the Office of the Navajo Nation President sponsored a contest. The president said, ‘We need to have people spend their money on the Navajo Nation. Let's try to have people not spend so much in the border towns.' And so he said, ‘Let's make up this logo called Buy Navajo.' And he had a contest for someone to come up with a design for this logo. I think it was a young man out of Shiprock, New Mexico that came up with our logo, and it's basically a corn stalk. And unfortunately, this is really small for people to see, but it's a corn stalk and then it has the four sacred mountains that Navajos have in the southwest. So we promote the Buy Navajo campaign. We try to tell people, ‘It's important to spend your money on the Navajo Nation, buy your groceries, buy your gasoline on the Navajo Nation, because that tax revenue will stay on the Navajo Nation.' So that's another example of civic engagement. As our president said, ‘Let's get all the people involved in trying to come up with a design for us, for the Navajo people.' Oh, okay, I'm sorry. It's called a view-tainer. It's just a container, you can buy these at Home Depot and it's just a really cool-looking container to put stuff in. We kind of saw it like as a little piggy bank maybe and you can put change in it.

So this year at the big Navajo Nation Fair we had just a brief survey that we were doing and we were just asking people, ‘What's the Navajo Nation sales tax rate?' We want to know if people are current on their information and then we asked them, ‘What's the sales tax rate in the nearest border town?' And that would be Gallup, New Mexico, if you're in Window Rock. And then we asked them, ‘Where's the last place you shopped at? Where's the last place you bought your fuel?' And so right now we're compiling that information. It's just also to make people a little bit more aware of where they do shop and just make them aware of taxes in general. What we did was we just put our own information inside the view-tainer so when people filled out the survey we would give them the container and then inside it had some of the answers like to some of the sales tax rates of the surrounding cities, counties, states.

That's what we do to try to educate people because, even with the general United States population, there's a huge misconception that Native people do not pay federal income taxes. So I would just like to ask all of you to please try to talk to people and let them know that that's not true. I attend a lot of tax conferences, and even people that work in the tax industry, they have that misconception. It's all about educating as far as taxes are concerned. I thank you for listening to me and I think maybe taxes are kind of boring for some people but it's actually very interesting to some of us on Navajo land. So thank you."

Joseph P. Kalt: Sovereignty: Your Best Tool for Development

Native Nations Institute

Harvard Project on American Indian Economic Development Co-Director Joseph Kalt share some innovative ways that Native nations have exercised their sovereignty in order to foster sustainable economic and community development.

Native Nations
Resource Type

Kalt, Joseph P. "Sovereignty: Your Best Tool for Development." Emerging Leaders seminar. Native Nations Institute for Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. March 25, 2009. Presentation.

Joseph P. Kalt:

"What I'm going to do is...this is fun for me. Part of what our jobs let us do -- [because] we work for universities and we don't really have to work -- is we get to drive around a lot and see the world and see really cool things out there. And so the real title of my talk is ‘Some Cool Ideas We See Out There That Might Be Interesting to You.' [Because] part of our job...I had, actually, a tribal chairwoman up in the Pacific Northwest one time say to us, ‘Oh, I get you guys. You're just a pipeline; you suck up information over here and shoot it out the other end.' [Because] you guys are too busy. You don't work for universities; you don't get to run around like we do and just sort of hang out. Really, some cool ideas we see out there, maybe they'll be useful to you. But the theme is, the theme is ‘Sovereignty is your Best Tool for Development.' You can feel in these sessions the only policy that's ever worked to turn things around in Indian country -- rebuild the communities, give people jobs, rebuild families -- is self-determination. That's the only policy that's ever really worked. Why? Well, sovereignty is a tool of development. I'm just going to show you (if I can figure out how this works...see I can do it; here we go) some cool ideas, things we see out there, people using their sovereignty as an asset, just like having money in the bank.

Create a city: what a cool idea! All around the earth we human beings, everywhere, we create little towns. Just pause and think about it. We do that, that's what we do. And they usually have a title like alcalde, if you're in Mexico, or mayor or something like that, whatever. You go out in Indian Country and quite often, there's only one town with any government. It's in the central, where the tribal headquarters are. Why is that? Why don't we see more? Not just a little community, but a real self-governing town? We human beings do this because someone's got to decide what the speed limit is down there on the road. Someone's got to decide, 'Where are we going to locate the solid waste facility?' Somebody's got to decide these very local things that all over the world we human beings have to face, but you don't see it in Indian Country. The tribal government, the central tribal government does it all. Why is that? ['Jurisdiction.'] What do you mean? She says 'jurisdiction.'"

Audience Member:

"The town of Mission, on the Rosebud Reservation in South Dakota, is the only real city in Mission, South Dakota. And they have their own functioning city council and this kind of thing. So it's a jurisdictional issue for us because if a non-Indian gets a DUI, then the city sheriff would pick them up and haul them in."

Joseph P. Kalt:

"And one of the reasons everything out there is run through the central tribal government is because historically, when the feds controlled everything, they only wanted one government to deal with, partly so they could control everything. ‘If I channel all my money through you, name you tribal chair; well then I can control everything.' And so you've got this legacy out across Indian Country of -- like you say -- no towns, in the sense of little governments. Not big governments trying to rule the world, but just getting the little things of daily life done. Alright. So there's some real cool cases out there.

One of the fastest growing towns in Indian Country for the last ten years has been Kayenta on the Navajo [reservation]. Interesting. Notice how I wrote that. That's the way towns identify themselves. You don't see that in Indian Country, right? [Because] of this legacy of, ‘We're going to channel those dollars so the federal government and all the power through the central tribal government [because] we want to control that. We don't want real self-determination for tribes. We want to control it.' What did Kayenta do? Well, they went out and basically said, ‘Darn it, we're going to create a town,' basically, a township. And they said, ‘We're having trouble with things like, well...' It's no different than any other nation. They were complaining about the central Navajo Nation government, just the typical thing. There's nothing wrong with central Navajo Nation, it's just they had local needs down on the ground, so they go in and they create a township.

They didn't levy taxes. They're not called taxes; they're called fees, little business fees. And they convinced the local, very small business owners and so forth, ‘Look, if you'll pay small fees to support what we're doing, we'll go out and do things like go in and do all the archaeological surveys we need to do as one big block and create a little industrial or business area.' Because what was going on was every time anyone would want to open a business, it'd then take 18 months to do...’Well, we'll go do it ahead of time and figure out, okay, this is a safe place for our history. We can have some business. Oh, we'll also use our little fees to put in, oh, water lines, buy a fire engine,' the things that towns do, okay? Oh, and they promised the community business permits. ‘You submit a permit,' I think they said, ‘we'll have it to you within 10 working days,' not two years -- fast. We'll try to provide local service for you.

Here's another case. Quil Ceda. Quil Ceda Village at the Tulalip Tribes north of Seattle. This is a really cool case. Sort of like, ma'am, like what you were saying about Mission. Well, they're a little frustrated. They're sitting next to Marysville, Washington and Seattle sort of dominating them. So they went out and they created a village. And it's this chartered city. It's a separately chartered city. It's a separately chartered city. This is actually their charter. That's actually part of their charter. They said, ‘We're going to exercise our sovereignty and...' you can just eyeball it there. ‘There's going to be a village council, there's going to...' the bottom right-hand corner, ‘we're going to start putting in our own public utilities.' They actually now have a company that runs the fiber optic system on the rez and it's taking over the cable television operation and the telephone operation and all the data stuff and so forth. They have ordinances and resolutions about how they're going to operate. They have administrative departments of clerks and treasurers. They have boards and commissions. They have taxes. They basically created a town.

They went to the feds and got their congressmen -- lobby, lobby, lobby. It's a federally chartered city. It's only the second federally chartered city in the United States. Anybody know what the first is? What's the first federally chartered? Huh? Washington, D.C. And now the Tulalips have the second federally chartered city. Why'd they get it federally chartered? [Because] they're getting -- don't tell anybody else -- they're getting ready for a big fight with the State of Washington over taxation. And by getting themselves federally chartered they can build an argument that, ‘Hey, wait a minute, Washington. We're not a city of the State of Washington, we're a city of the United States. You state, you don't have jurisdiction over us.' Pretty cool little try they're doing.

And what did they end up with? They've ended up with this economic powerhouse, just an absolute economic powerhouse. Quickly, their two basic businesses are two shopping malls. They just opened a major casino a year ago April, but they basically built themselves on two shopping malls. There's one of them. Just the classic big box stores; Home Depot, Walmart, etc. And then they have one of these high-end outlet malls. And the payoffs for them: jobs. It turns out by creating a city, it's like running a business. There's lots of jobs. ‘Oh, I now have to have a crew, because I've made myself a city, I have to have a crew who takes care of the strips along the roads of the grass and so forth [because] you've got to keep vegetation a little ways off the roads so you don't have fires and so forth. Oh, and I have to have my own water company and I have to have my own cable TV company and I have to have my own building inspectors and I have...' and on and on and on. If you pause and think about it, it's actually a pretty good business because you create all these jobs.

They now are the economic powerhouse of their region. I think they employ something like three times more people than are members of the tribe, or at least adult members of the tribe. And most of their citizens are working for their tribal government. Go ahead and let somebody else stand behind the cash register at Walmart. Their tribal members are out there running the highest tech -- I took a tour recently of it -- running the highest-tech water treatment facility in the United States. They've got this, they've got a special -- I'm not very good at science -- but it has something to do with a membrane that you push the water through and so forth. And they're now being looked at around the United States as one of the best water companies in the United States. And they have fire departments and they have health inspectors and so forth -- income for people.

They started asserting jurisdiction. You gave me the perfect lead for this. They started asserting jurisdiction. Because now, ‘Wait a minute. No, thank you. Our cops will patrol here. No, thank you. Our school buses will go here. No, thank you. Our health inspectors, our fire inspectors...' Jobs, jobs, jobs. But also, jurisdiction, jurisdiction, jurisdiction: using that power to create a town, using sovereignty to create economic development, but also to expand their jurisdiction. Also, in the process, building an unbelievably qualified and capable set of employees. They're sitting there now as the economic powerhouse, as the economic powerhouse in their region.

So what happens? They get invited to every damn meeting. They're starting to complain. They basically are starting to be treated like another county or city [because] they're so powerful. All the other governments around them have to recognize their sovereignty and have to deal with them. And so they now have these employees who are getting so well trained, they go to the meetings and they're the dominant, they dominate the meetings. They go to the meetings with the surrounding counties and they're going to have a meeting on, they have big problems, they live right on an interstate highway and -- the weirdest thing I ever heard -- right on this interstate highway, whenever they need a medevac [helicopter], they close down I-5, right in front of the Tulalip's, and land helicopters and it causes all the traffic to have to get off the freeway and run through the middle of Tulalip. Well, this creates all this jurisdictional trouble. The tribe basically controls the process, because they've got the best traffic planners out there. They can tell you -- it's just fascinating -- they can tell you exactly the rate at which light posts will be demolished by cars at parking lots. You might think it's crazy but it's some crazy...They have to apparently replace like 65 light posts a year. They all cost like $8,000 or something like that. But they're in charge of this in building essentially a city that is dominating their region.

Jurisdiction: it also gives them pride. They're the ones calling the shots on water treatment. They're the ones calling the shots on traffic control. It may seem like little things, but now the kids grow up with a different image in their mind, don't they? The kids grow up thinking, ‘Hey, this is sort of cool. Yeah, we go down to that meeting with the counties and we're there. So they're kicking butt. We know what we're doing. We've got the best-trained people. We've got jurisdiction.' And you see that resurgence of pride. How did they do it? How did they do it? How did they do it?

They started to get a mentality -- when I talk to people there -- they start to get a mentality that they don't run grants and programs, they don't have a housing program, they don't have a fire prevention program, they don't have a street-paving program run on some grant. They have departments. They're a government. They're a city. They have to do all of these things. And it's a change in mentality to think, ‘We're not just here living from hand to mouth.' And if someone funds highways next year we'll have a highway program. Nuh uh. They're investing in the planning, building the infrastructure to be departments, if you will, not grants.

And codes for everything. Codes for everything. These guys are code mad. They have the health code, they've got the fire code, they have the code for how far the sidewalk has to be placed away from the street, how often the grass has to be cut next to the street. Why did they do that? Why would anybody...they spend all their time writing codes, writing codes. Jurisdiction. They describe it as just a shield. When somebody wants to assert, ‘You don't have authority to have your own fire department.' You pull out, ‘Yes, I do. See my code? See my code? I do too.' ‘Where'd you get it?' ‘Well, our government created it. Well, that's the same way you, City of Marysville, got your fire department is you created a code.' So this tribe very much is conscious of the number, one of the main tools they have now to fight with over this issue of jurisdiction, is they basically any time anyone comes at them, 'Well, you don't have a good health department.' 'Wait a minute, my health department's better than your health department.' They're very aggressive, very, very aggressive about this.

They also have an attitude. 'We're going to do it ourselves and we're going to do it better. We're going to do it ourselves and we're going to do it better. When we walk into that meeting, when we walk into that meeting with the counties on traffic flow, or whatever it is we're going to do, or sharing the cost on repaving a road that cuts across the res, we're going to be better prepared, we're going to have better training, we'll have harder numbers. And if you fail me, if you don't do your job and don't show up, you're not going to have this job anymore as the head of our highway department.' I'm picking on you, I don't know why. You look like a nice guy, too, I don't know. My point is, they have this attitude and they hold each other to it. It's an attitude of, ‘Look, guys, let's go out there and really, really be a nation.' In this case, be a city. They hire the best. They hire the best.

Now, that sometimes means they don't hire Indian, but it doesn't bother them because they say, ‘Well, we're in charge.' Now watch me pick on somebody. ‘I'll hire this white guy here to be my police chief.' Why? Because he's the former president of the State of Washington's police chief's association and no one's going to be able to come in and push him around. Now, sure, part of his job is to try to get a young Tulalip guy to come along and be the next police chief, but the attitude is one, ‘We're going to go out there and we're going to get the best, and I don't care if you're Native or not [because] we the city, our sovereignty, our jurisdiction controls you.'

And then taxes...and not grants. It's that same mentality. It's that same mentality. All over Indian Country, people have to live in this environment in which the governments are so weakened because people keep taking jurisdiction away. Most governments in the world, it's actually not an evil thing -- if you provide services back to your citizens, it's not an evil thing that you go out and levy taxes. And so this tribe is sitting there, taxing these businesses -- actually trying to tax even more -- starting to tussle with the state, as you can imagine. But again it's that mentality of being a real government. They don't spend their time with grant writers. They've got a couple, I think they have one grant writer, but that's not what they fundamentally do. They don't make their life and their livelihood off of that mentality. They say, 'Look, we're going to provide services to our citizens and to the people who are in our shopping malls. We're going to provide them services and we provide good services, actually people don't complain.' And the result of this is they are not putting pressure on their neighbors, these sort of horribly run cities around them, who are now having to reform themselves because the non-Indian citizens at the next town were saying, ‘Hey, wait a minute. Quil Ceda Village is much better run than the town of Marysville.' And so you start to see that assertion and the pride and the ability to get these things done.

Now maybe this works for you and maybe it doesn't. I don't know. But it's a pretty cool idea in terms of using your sovereignty, using sovereignty to really go out and make it an asset in the fight for development and jurisdiction. A couple more real quick ones. Start taxing: another cool idea. But maybe you don't call it that. It's still a bad word. I'm not stupid. But, well, maybe I am stupid; you guys can judge that later. But start taxing. Why? Because you're trying to get off of that system of, ‘Oh, is my department going to survive depending entirely on whether I can go get a grant,' and whether, ‘you got sick last year and didn't get the grant written,' or whatever it was. But to do it, you've got to do the first thing, in a sense. And it doesn't have to be a city. The message obviously is if you can provide capable and high-quality services to the people, they turn out not to fight you quite so much about that second thing up there.

Examples: 2002, the Navajo Nation instituted the first comprehensive sales tax in Indian Country. What did they do? They earmarked it for things that met their priorities, for their priorities -- trust fund, land acquisition, local governments. And then they had smart and culturally based exemptions. Cultural organizations not subject; if you're selling things and you're a non-profit, not subject to our sales tax, for example. [Because] you're trying to design a system that works for you, not somebody else's sales tax. The payoffs? Started to build the missing infrastructure. What do I mean by missing infrastructure? All around Indian Country, I'll give you an example, there are no street lights [because] the feds never fund street lights. Another one: dental clinics, eye clinics. It's real interesting, you look around Indian Country, as tribal governments start to generate their own resources under their own jurisdiction, you can see actually where the missing stuff is, the missing services. Things like eye care never was a priority. Teeth. ‘Oh, teeth didn't seem...' ‘Well, wait a minute. Why should some outsider tell me whether my teeth are important?' And also, again it's very interesting -- here's a guy standing up here to tell you to go tax your people, but in all honesty it starts to send a signal. This is our government. It's a government of us. It's a government of the people.

One last idea: leverage your sovereign immunity. What do I mean by that? Incorporate under your own laws. It's kind of a movement around Indian Country now. Why incorporate under the State of Montana law? Why incorporate under the State of New Mexico law? Why not incorporate under your own law? And so you have cases; here's a tribe actually in El Paso, Texas, Ysleta Del Sur [Pueblo], can't get any economic development going. They feel like every time, they've got kind of a racist government around them in the State of Texas, and they create their own laws of incorporation. That's just parts of it there, sort of again, it's what the Tulalips are doing: codes, codes, codes. Well, in this case, we're going to create our own through our own jurisdiction. You don't have to incorporate in the State of Delaware or the State of South Dakota. You can incorporate here at this nation. This just goes on and on. It's interesting, Ysleta Del Sur is a Tigua, is Tigua. And so notice down at the bottom there: 'Corporate name shall be in the Tigua...' This is their law. The State of Texas, I'll guarantee you, never would have said, ‘Any business incorporated in the State of Texas shall have a Tigua name.' Ain't gonna happen, guys.

Challenge the nation with sovereign immunity. Waiving sovereign immunity? Where did this idea of immunity come from? Do you know where the word sovereign comes from? Do you know who the sovereign is? It's the king. This idea of sovereign immunity comes from British and European kings saying, ‘I am above the law. You, my subjects, cannot ever sue me or come after me in anyway. I am above the law.' Well, that's interesting. So the idea of sovereign immunity actually comes out of these Western European kings. Here's what real nations do with sovereign immunity.

My first one is, who wants to be West Virginia? Here's an interesting little tidbit. The poorest state in the United States is West Virginia. What's West Virginia also known for? They get on TV now and then. Coal mining. When do we see them? Yeah, or when there's an accident and there are 32 miners trapped in...now that's interesting, the government mine inspectors don't seem to work very well. We did a little analysis of the state constitutions around the United States. The State of West Virginia has the absolute strongest prohibition on any waivers of sovereign immunity of any state in the United States. You can't waive sovereign immunity in the State of West Virginia for anything. And they're the poorest place in the United States,

Now that's a tough issue, right? Wait a minute. Waive sovereignty? Well, waiving sovereign immunity isn't the same as waiving sovereignty. What real nations do all over the world because, face it guys, they're not going to lend you money unless there's some recourse. You're not going to get lended; no one's going to lend you money. So what governments do all over the world? They create international treaties. Example, the Treaty of Mauritius, [because] it was signed in this little country called Mauritius. A bunch of countries in the world said, ‘Okay, I'll deal with you, you deal with me. We'll set up our own separate court system. We'll set up our own separate court [because] I don't want to waive sovereign immunity into your courts and you don't want to waive sovereign immunity into my courts.'

Options: more and more tribes are succeeding in writing contracts in which they waive sovereign immunity on their company, but they don't waive sovereign immunity on the state, that is on their nation. They waive sovereign immunity into their own courts. 'Yes, you can sue my coal mine company. Yes, you can. I'm waiving immunity, but you've got to sue in my own courts.' That's what other governments do. That's what other governments do, except for West Virginia. West Virginia can't sue anybody from the state. And so those mine inspectors are just horrible, they have no accountability and they get on TV [because] they kill people. Waive sovereign immunity into your own courts. But to do that you have to have courts that work. You can talk a big talk, you can talk a big talk, but you have to have courts that work.

Second, waive sovereign immunity into international courts. Examples: Pacific Northwest. The Northwest Indian Tribal Court essentially says to a bank or a car dealer, ‘Hey, I'm going to waive my sovereign immunity, but we're going to waive it into the Northwest Indian Intertribal Court.' Oh, that's sort of cool. How's it work? Fundamentally it works if I'm a car dealer and I'm going to...'What tribe are you from? You're not Pacific Northwest. Okay, you're Tulalip. I'm going to waive...I'm going to sign a deal with you and if we get into a dispute, we're going to go into...Okay, I'll do it.' 'I'm the banker. I'll sign a deal with you. We're going to go into the Intertribal Court. We get to the Intertribal Court and nobody from your tribe can be on the hearing panel. We'll have judges from other tribes.' As long as you're not AIG, that's right. As long as you're not AIG, good point. So creating courts among tribes is one way by which you can provide assurances. Investors don't think the best things of state courts. It's not like people, like business people have great confidence in state courts. In fact the State of West Virginia has some of the worst courts in the United States. Indian tribes can out-compete by making yourself safer and a true rule of law.

Last point: waive yourself into arbitration. More and more tribes essentially say, 'We'll waive ourselves into arbitration,' meaning, you pick. 'If we get in a fight, you and the banker, we're going to...you pick one person, I pick another, so we're equal and then they'll pick a so-called neutral and we'll have...at least we'll have a level playing field.' But then you have the issue of -- and I'll tell you one last sort of cool story -- you have the issue of, if you have an arbitration award, who enforces it? Who enforces it if you have an arbitration award? 'You owe me money. The arbitrator, our arbitrator here just said you owe me $10,000,' and you go like this. You say, ‘I'm not going to pay you.' How do we enforce it? Very interesting. There's a very interesting case of a tribe borrowing like $110 million. They set up an arbitration clause and they had this big fight in the tribal council, should we waive sovereign immunity and here's what they did. It's kind of a cool idea. This is what I mean by challenging your own nation. We're trying to borrow $110 million. We don't want to waive sovereign immunity completely. We'll waive into arbitration. By that I mean, if we get in a fight, we'll go to arbitration and then on enforcement of an arbitration award, that will go to tribal court. If our tribal court won't enforce an otherwise proper arbitration award, then you can take us to state court.

This is a tribe that basically said, ‘Look, the tribal council meeting was cool. Look, we're talking big shots like we're sovereign and all that. We might as well back it up.' If we won't enforce our own agreements, what's it do? It puts the pressure then on the tribal council to make sure that they've got a good tribal court because that arbitration award, if it wasn't enforced by the tribal court, then it was going to go to state court. And the bank said, ‘Yes.' They've never had a fight, never had to do this, but it was enough for the investor to say, ‘Hey, we'll do it.' You waived yourself into your own courts.

Alright. I don't know, just kind of cool ideas we see out there, just kind of things we see that tribes are doing. Whether they work for you, I don't know. Everybody's different, but there's a lot of cool stuff going on out there."