Tribes make deal to keep portion of their sales taxes

  • Thursday, January 30, 2020 1:30am
  • News

OLYMPIA — The Tulalip Tribes have reached an agreement with the state and Snohomish County to end years of litigation and begin sharing millions of dollars in sales tax receipts generated at the Quil Ceda Village shopping center.

Under the deal, the tribe would receive a sliver of the state’s sales tax collections this budget cycle, with the sum growing to an estimated $30.2 million in 2025. Snohomish County would continue receiving all its regular sales tax allotment.

Before most of the revenue-sharing kicks in, the tribe will spend $35 million to design and build a 48-bed civil commitment center in the county, a capital investment sought by the state.

Signers hope the deal will spur settlement of a five-year federal lawsuit and a generation of political battles over who can rightfully collect sales tax at Quil Ceda Village.

The fate of the three-party accord hinges on the Legislature. It must give Gov. Jay Inslee authority to negotiate sales tax-sharing compacts with federally recognized tribes.

That effort will start Thursday with hearings in the House and Senate on bills empowering the governor to act. Tulalip Tribal Board Chairwoman Teri Gobin said the effort has been ongoing for 20-plus years.

“To date, we have never received a dollar, yet we have been 100% responsible for the costs of all the infrastructure and governmental services that allow those businesses to operate,” Gobin wrote in an email.

Snohomish County faced the prospect of losing out on $7 million a year, or more, if it didn’t prevail in the legal battle. In June 2015, the Tulalip Tribes sued the state and county to stop the state’s collection of the tax on sales to non-Indians at non-tribal stores in Quil Ceda Village. The tribes contended it was their exclusive right, as a sovereign government, The village consists of 2,100 acres of shops, a resort and a casino. Major shopping attractions include Seattle Premium Outlets, Cabela’s and Walmart.

In 2016, the state collected nearly $27 million in sales tax on more than $400 million in sales at Quil Ceda Village. The county and Community Transit took in another $9 million in taxes.

The state spends its sales tax dollars on education, health care and other programs. The county used its share to fund day-to-day operations. In October 2018, a federal judge ruled in favor of the county and state. The tribes appealed.

Last April, representatives of the state Attorney General’s Office requested the county and tribes try mediation. Nine months of talks led to the Jan. 8 agreement.

The start of revenue-sharing will start as soon as July if lawmakers act.

“If the legislation doesn’t pass, we proceed with the appeal,” Gobin said.

Under the agreement, the Tulalips will get $500,000 of sales tax that now goes to the state. In the 2023-25 budget cycle, the tribes will be entitled to half of the receipts as long as the tribe works toward the civil commitment center. Otherwise, it will be 25% until those conditions are met.

A fiscal analysis projects the tribes could receive $4.14 million in this state budget, $8.5 million in the next budget and $43.1 million in the 2023-25 biennium. Starting in 2025, the tribe’s share could amount to around $30 million a year.

Getting a behavioral health facility was key to the negotiations, Gobin said.

“The state asked if we would build a civil commitment facility for them; they said this was a huge issue in terms of funding and siting the facility and thought it would go a long way in showing good faith for a future partnership,” she said.

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