Bet on roads? Tribes could lose in gambling plan

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Despite repeated failure, a bill has resurfaced that would inject $60 million of Native American gambling money into the state’s crumbling roads.

Jeff Yaroch

Early this session, state Rep. Jeff Yaroch (R-Richmond) introduced House Bill 4093 that would use casino revenue shared with the state to help pave Michigan roads. The same bill failed to gain traction the past three legislative sessions.

And it’s only a drop in an estimated $1.5 billion bucket needed to fix the roads, according to the latest projection from Michigan Department of Transportation Director Paul Ajegba. Some estimates put the figure north of $2 billion annually.

Additionally, at least one tribal leader says he is opposed to the legislation.

But Yaroch nonetheless argues the measure will help restart a much-needed road repair conversation as the Legislature cruises into upcoming budget negotiations this spring and summer.

The bill has the bipartisan support of state Reps. Steven Johnson (R-Wayland Twp.), John Chirkun (D-Roseville) and David LaGrand (D-Grand Rapids), who did not return calls to the Michigan Advance.

Yaroch’s proposal is simple. In 2017, tribes paid the Michigan Economic Development Corporation (MEDC) a little less than $60 million. The money helps bolster a larger pool of state money used to boost the economy through financial incentives, often in the form of tax aid and grants, awarded to businesses that set up shop or expand in Michigan.

Potholes cover most of this East Lansing road | Susan J. Demas

His bill would transfer that money to the Michigan Transportation Fund.

“This starts the conversation about whether or not we have economic development money,” Yaroch said. “At this point maybe we should be focusing that on roads to encourage economic development in this state.

“The best way to encourage business here, encourage entrepreneurs here in Michigan, is to address our road issue,” he continued.

It’s a sentiment — at least in its end result, if not in the road to get there —  shared by Democratic Gov. Gretchen Whitmer, whose 2018 campaign battle cry was, “Fix the damn roads!”

Although the plan has sputtered in recent years, now-House Speaker Lee Chatfield (R-Levering) sponsored nearly identical legislation in 2015 that passed the GOP-controlled House in a 59-50 vote. It promptly died in a Senate committee, however.

Lee Chatfield | Nick Manes photo

Despite Chatfield’s 2015 support, it’s not clear whether he intends to push the legislation again. A spokesman was noncommittal.

“As per usual, Speaker Chatfield will defer to the committee chair on when to look at the bill and will allow the committee to do its work vetting the legislation,” said Gideon D’Assandro.

Tribe pans plan

But the legislation does shift into high gear, Michigan’s Native American tribes could lose big on betting casino money, according to Aaron Payment, tribal leader for the Sault Ste. Marie band of Chippewa Indians.

“I do not support those moneys being moved by the Legislature out from underneath the original mission and purpose of the MEDC,” Payment said. “If anything, we need more commitment to Indian country.”

About $5.5 million in grants for 46 different projects across the state have been reinvested in Michigan tribes through the state’s tribal business development program, according to MEDC data. The semi-private state department said that investment has spurred 231 new jobs and more than $38 million in private investment in Michigan tribes.

Former Gov. Rick Snyder at the 2011 Tribal Summit with the Sault Ste. Marie Tribe of Chippewa Indians | State of Michigan

So while Payment said he empathizes with the damage incurred by cars across the Mitten State due to potholes of all sizes everywhere, he said he’s absolutely against any effort to reinvest tribal casino money — paid to the state under tribal compacts — in state roads.

Between 1993 and 2012, Payment’s tribe paid more than $40 million to the MEDC or MSF, according to state data. Michigan’s 12 federally recognized tribes have collectively paid more than $761 million during the past 25 years.

Tribes additionally pay more than $29 million each year in local government revenue sharing — some of which could be used to pave local roads that are not under state jurisdiction.

MEDC offered funding for a Little Traverse Bay band of Odawa Indians project in Petoskey in recent years for a project that involved tearing down the former Victories Casino and aiding in commercial developments, according to MEDC spokeswoman Kathy Achtenberg. The tribe demolished the facility in 2013 and has built a new Odawa Casino.

“The MEDC provided several grants over several years and helped with the costs of the demolition of the former casino, clean-up activities, site preparations, site improvements, and new infrastructure on the property,” she said. “There has been ongoing matching funds from the tribe for the MEDC grant dollars.”

Odawa Casino under construction | Wikimedia Commons

The grants were provided through their economic development corporation, the Odawa Economic Development Management Inc. (OEDMI). From 2013 to the present, $1.03 million was granted. Total matching funds were $2.16 million and the total estimated investment to complete Phase 1 development is $21 million, the MEDC said.

MEDC plans $1.3 million in grants to tribal businesses between 2019 and 2020.

Payment praised the former Gov. Rick Snyder Administration for listening to his concerns in 2015. The tribal leader said David Nyberg, then-deputy legal counsel and tribal liaison for the Republican governor, heard him out.

“I think that helped,” Payment said. “The utility of the MEDC in recirculating economic development dollars back into the communities has got a great benefit.”

Larger economic development debate

The Michigan Strategic Fund (MSF) — an arm of the MEDC — receives $260 million annually in total state appropriations.

Potholes tearing through a Meridian Twp. road | Susan J. Demas

Yaroch’s bill for road spending would have no impact on that funding, said Achtenberg, although the legislation would amend the “Michigan Strategic Fund Act” to authorize the financial transfer.

MEDC, however, would lose out on $60 million a year. The broader organization provides “administrative support” to MSF, which is supplemented to a small degree by tribal revenue sharing.

Steven Johnson

Still, Yaroch and others on both sides of the aisle question how useful the MEDC is more broadly.

Johnson, the West Michigan Republican who’s a co-sponsor of Yaroch’s bill, even sponsored a separate plan to completely dissolve the MSF. That measure is unlikely to go anywhere.

But the discussion on how useful that department actually is for economic development in Michigan is not one that’s likely to disappear anytime soon.

“With all the economic development tools, it’s sometimes hard to really pinpoint their success,” Yaroch said. “There’s always this debate. At this point in time, one of our greatest hurdles in economic development is our roads. That’s where we need to fund to encourage … and promote economic development.”

Michael Gerstein
Michael Gerstein covers the governor’s office, criminal justice and the environment. Before that, he wrote about state government and politics for the Detroit News, the Associated Press and MIRS News and won a Society of Professional Journalism award for open government reporting. He studied philosophy at Michigan State University, where he wrote for both The State News and Capital News Service. He began his journalism career freelancing for The Sturgis Journal, his hometown paper.

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