In its 2014 Great Wolf Lodge decision, the United States Court of Appeals for the Ninth Circuit recognized that tribes possess the exclusive sovereign authority to tax permanent improvements on lands held in trust for tribes by the federal government. The case ended the collection of property tax revenue from tribal trust lands by Washington State, counties and state-created tax districts.
The decision also cleared the path for the Swinomish Indian Tribal Community ("Swinomish" or "Tribe"), for the very first time, to tax improvements built on Reservation lands held in trust for the Tribe or individual Indians.
The opportunity to assess and collect a Swinomish tax on Swinomish trust land improvements represents a vital exercise of sovereignty and self-governance. But with opportunity comes challenge: by removing these on-Reservation properties from the state tax rolls, Great Wolf Lodge placed certain local governments and tax districts on the path to budgetary crisis.
The Tribe's unanticipated challenge was therefore to build a Swinomish tax program from the ground up, while simultaneously strengthening local intergovernmental relationships to secure the continuity of tax-funded services.
Only success on both fronts would allow Swinomish to effectively exercise its sovereign tax authority and defuse a burgeoning budget crisis with disastrous potential for the local Tribal and non-Tribal community.
Just as the Tribe formed an ILA with Skagit County to implement the 2014 Interim Tax Code, in more recent years it has continued to enter into ILAs with the local taxation districts affected by the transition to Tribal taxation: La Conner School District (LCSD), Fire District 13 (FD13), and La Conner Swinomish Library District (LSLD).
These agreements form the basis through which the Tribe, funded by U&O Tax revenue, makes voluntary annual contributions to these local partners.
These contributions are the final component of the Tribe's intergovernmental strategy: ensure close cooperation and continuation of services that benefit both Tribal and non-Tribal members of the local community by making voluntary financial "contributions" to help reduce potential loss of services to the on- and off-Reservation community.
