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� � �� r � <br /> REPORT <br /> To the Honorabie Mayor and City Council <br /> From the City Manager <br /> October 25, 2004 <br /> Subject <br /> Resolution opposing Proposition 70 on the November 2, 2004 State-wide ballot <br /> Recommendation <br /> Approve the resolution opposing Proposition 70, the Triba/ Gaming Compacts and Exclusive <br /> Gaming Rights Initiative, on the November 2, 2004 State-wide ballot <br /> Background <br /> Earlier this year, Governor Schwarzenegger negotiated "fair-share" agreements with major <br /> Indian gaming tribes that are intended to add $1 billion in revenue for the state this year, <br /> dedicated exclusively to transportation projects. According to the Govemor, these fair <br /> share agreements were also designed to bring the state hundreds of millions of dollars <br /> more in future years, to help local govemments meet their law enforcement, fire protection <br /> and infrastructure needs, strengthen environmental protections, and provide more rights <br /> and safeguards for casino workers and guests. <br /> Proposition 70 is an initiative drafted by one Indian tribe involved in gaming, and placed on <br /> the November ballot. If passed, it will negate the Govemor's previously negotiated <br /> agreements, and would allow Indian-operated gaming businesses to pay a corporate tax <br /> rate as paid by private businesses, as a percentage of their net profits, in exchange for <br /> exclusive 99-year leases, and an expansion of the types of games allowable for Indian <br /> casinos. <br /> This proposition does not contain provisions to allow for an audit of casino financial <br /> records to determine their actual net profits, therefore leaving undetermined the actual tax <br /> that they would pay. Further, there are some legal analysts that question the proposition's <br /> corporate tax provisions — they note that if the initiative passes and those provisions are <br /> found to be preempted by federal law and therefore severed from the initiative, the tribes <br /> would still have a 99-year monopoly over casino gaming activities and would not be <br /> required to make any payments to the state. <br /> Additionally, according to the State Legislative Analyst, the ultimate payments to the state <br /> would likely be lower than those at present. Unlike the compacts the Governor negotiated <br /> with the tribes, Proposition 70 does not require tribes to pay any compensation to local <br /> governments for impacts caused by casino operations. <br /> _.. _ . <br />