Hearing focuses on cigarette sales on Indian reservations

As state lawmakers Tuesday bemoaned losses from untaxed cigarette sales on Indian reservations, an attorney for Gov. David A. Paterson raised the prospect of violence if New York enforces laws aimed at recovering the funds.
Citing State Police, Peter J. Kiernan, counsel to the governor, said it was possible the cost to police of guarding collectors on reservations could surpass the taxes collected.
Native Americans testifying at the all-day hearing at Borough of Manhattan Community College Tuesday, most notably the Seneca Nation, strongly resisted the notion of paying state taxes on the sales to nontribal members. Violent confrontations accompanied two attempts at tax collection by the state in the 1990s.
"A police problem could quickly elevate to a military one," Kiernan said, adding Paterson is still considering how to move forward. He said the state favors a policy of negotiating a peaceful settlement.
Paterson's proposed resolution would establish minimum price levels for cigarette and fuel sales, which, if broached, would shift the difference to fund borrowings for infrastructure projects equally benefiting Indian reservations and nearby nontribal lands.
But looming large at Tuesday's hearing was the state's budget deficit. Numerous senators cited the shortfall and expressed frustration that existing laws to tax the cigarettes weren't being enforced. Measures empowering the state to collect the tax, including one signed by Paterson in December, are stalled, either in courts or as a result of negotiations with tribes.
Estimates of state losses from non-native cigarette sales range from $100 million to more than $1 billion annually. Yet costs for law enforcement, should the measures be enforced, could surpass more than $2 million a day, Kiernan said.
Emotions ran high at the hearing of the State Senate committee on investigations and government operations, chaired by state Sen. Craig Johnson (D-Port Washington).
When state Sen. Michael Nozzolio (R-Fayette) told Seneca Indian Nation co-counsel JC Seneca that he would "hope that the nation would not condone violence," and that Seneca didn't strike him as someone who would, Seneca said, "You don't know me very well, do you?"
While he said he was kidding, Seneca went on to mention a mural he said he sees in a state office building when he visits the governor's office, which he says depicts the killing of an Indian, and said: "You tell me about violence."
James F. Simermeyer, an attorney for the Poospatuck tribe, based in Mastic, noted it was the "smallest and poorest in New York," yet had drawn five federal lawsuits and various government enforcement actions. He added the tribe has not been invited to talks to resolve the tax collection. He called on the state to "deal with this tribe in all fairness as it does with other tribes."