<DOC> [109 Senate Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:27563.wais] S. Hrg. 109-504 ECONOMIC DEVELOPMENT ======================================================================= HEARING BEFORE THE COMMITTEE ON INDIAN AFFAIRS UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS SECOND SESSION ON OVERSIGHT HEARING ON ECONOMIC DEVELOPMENT IN INDIAN COUNTRY __________ MAY 10, 2006 WASHINGTON, DC _____ U.S. GOVERNMENT PRINTING OFFICE 27-563 PDF WASHINGTON : 2006 _________________________________________________________________ For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON INDIAN AFFAIRS JOHN McCAIN, Arizona, Chairman BYRON L. DORGAN, North Dakota, Vice Chairman PETE V. DOMENICI, New Mexico DANIEL K. INOUYE, Hawaii CRAIG THOMAS, Wyoming KENT CONRAD, North Dakota GORDON SMITH, Oregon DANIEL K. AKAKA, Hawaii LISA MURKOWSKI, Alaska TIM JOHNSON, South Dakota MICHAEL D. CRAPO, Idaho MARIA CANTWELL, Washington RICHARD BURR, North Carolina TOM COBURN, M.D., Oklahoma Jeanne Bumpus, Majority Staff Director Sara G. Garland, Minority Staff Director (ii) C O N T E N T S ---------- Page Statements: Dorgan, Hon. Byron L., U.S. Senator from North Dakota, vice chairman, Committee on Indian Affairs...................... 4 Garcia, Joe A., president, National Congress of American Indians.................................................... 11 Hall, Tex, chairman of the board of directors, Inter-Tribal Economic Alliance.......................................... 13 Johnson, Hon. Tim, U.S. Senator from South Dakota............ 4 Jorgenson, Miriam, research director, the Harvard Project on American Indian Economic Development....................... 19 McCain, Hon. John, U.S. Senator from Arizona, chairman, Committee on Indian Affairs................................ 1 Meeks, Elsie, executive director, First Nations Oweesta Corporation................................................ 17 Middleton, Robert, director, Office of Indian Energy and Economic Development, Office of the Assistant Secretary for Indian Affairs, Department of the Interior................. 1 Morgan, Lance, chief executive officer, Ho-Chunk, Inc........ 15 Appendix Prepared statements: Dorgan, Hon. Byron L., U.S. Senator from North Dakota, vice chairman, Committee on Indian Affairs...................... 29 Garcia, Joe A. (with attachment)............................. 31 Hall, Tex (with attachment).................................. 67 Johnson, Hon. Tim, U.S. Senator from South Dakota............ 74 Jorgenson, Miriam............................................ 75 Meeks, Elsie................................................. 96 Middleton, Robert............................................ 105 Morgan, Lance................................................ 115 National Center for American Indian Enterprise Development... 117 Native American Contractors Association...................... 123 Additional material submitted for the record: American Indian Population and Labor Force Report 2003, U.S. Department of the Interior, Bureau of Indian Affairs, Office of Tribal Affairs................................... 124 ECONOMIC DEVELOPMENT ---------- WEDNESDAY, MAY 10, 2006 U.S. Senate, Committee on Indian Affairs, Washington, DC. The committee met, pursuant to notice, at 9:30 a.m. in room 485, Senate Russell Office Building, Hon. John McCain (chairman of the committee) presiding. Present: Senators McCain, Dorgan, Johnson, and Thomas. STATEMENT OF HON. JOHN McCAIN, U.S. SENATOR FROM ARIZONA, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS The Chairman. We will get started. As several of today's witnesses point out in their written testimony, Indian gaming has the reputation of having made Indians rich. Members of this committee know that is not the case. For many Indian people, poverty continues to be an intransigent problem, despite Government programs and tribal gaming facilities. Unemployment, for example, is a persistent presence on reservations and tribal economies are often unstable. We also know that poverty has many components and there is no single or simple solution. If there were, we might have found it by now. Today, however, we turn to people who are working to identify and implement solutions. The witnesses each have experience in identifying what works to create healthy and diversified tribal economies. I look forward to their insights. Senator Dorgan is on his way over and will be here shortly. In the meantime, Dr. Middleton, we will begin with you. Our first witness is Dr. Robert Middleton. He is the director of the Office of Indian Energy and Economic Development, Office of the Assistant Secretary for Indian Affairs at the Department of the Interior. Welcome, Dr. Middleton. STATEMENT OF ROBERT MIDDLETON, DIRECTOR OFFICE OF INDIAN ENERGY AND ECONOMIC DEVELOPMENT, OFFICE OF THE ASSISTANT SECRETARY FOR INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR Mr. Middleton. Good morning, Mr. Chairman and members of the committee. You have my written testimony, but I would like to open with a brief 5-minute statement and point out some of the highlights of my written testimony. My name, as you mentioned, is Bob Middleton. I am director of the Office of Indian Energy and Economic Development. It is a new office that was formed by the Secretary of the Interior to address some of the issues that you raised in your opening statement. We also would like to talk a little bit about our workforce labor report. The Department of the Interior believes that the Indian workforce information is a critical indicator of an Indian community's well being or distress. Information on Indian employment is also a critical social and economic factor in the department's program, planning and execution and can be used as a proxy measure of socio-economic conditions in a given Indian community. This really allows us to use it as a long-term social and economic services demand indicator on our programs. The biennial Indian labor force report is the only known comprehensive and certified accumulation of data on tribal enrollments, service population, workforce and employment, and it is used for a wide range of purposes by the equally wide range of users. The labor force report is also used by tribes in showing governing stability, efficient governing institutions, effective community support systems and mechanisms, and solid community support, which demonstrates the community is a good place to locate businesses, put venture capital, and/or capitalize on untapped labor pools. However, really no matter how one analyzes the data in the labor report, there is no dispute that reservation unemployment has been too high for too long. The 2000 census tells us that real per capita income of Indians is less than one-half the United States level and that Indian unemployment is more than twice the United States rate. Chronic joblessness seems endemic to many parts of Indian country, resisting all antidotes, and it plagues one generation to the next. In many cases, the sheer remoteness or isolation of some reservation is an enormous hurdle that tribes must overcome to get capital flowing into their reservations, rather than out of their reservations. Although the remoteness of many reservations from markets and services might provide a partial explanation, it does not explain why Indian joblessness lingers on despite good economic times in adjoining non-Indian communities. For example, according to census data, Buffalo County, SD is America's poorest county. About 2,000 people live there, yet just to the east of Buffalo County is Jerauld County, which is similar in size and population, but has a much higher income and much lower unemployment rate. A recent article by John Miller in The Wall Street Journal noted the disparities between these neighboring counties and found the main difference between the is that the Crow Creek Indian Reservation occupies much of Buffalo County. As Miller notes, ``the place is a pocket of poverty in a land of plenty.'' I think like virtually all Americans, the Department of the Interior is saddened that any communities within the boundaries of the United States should not be able to share in this country's success and persist as pockets of poverty, and we are not willing to accept that they should remain so. While success in improving the economy of Indian communities has been uneven, we believe we do have a clear understanding of how they became pockets of poverty and why reservation unemployment is different than unemployment elsewhere. One thing we know for certain is that one size fits all does not work to address the unemployment and underemployment issues on reservations. That is why the department is taking a focused approach to work with individual tribes to identify and nurture economic development opportunities that fit best with the tribe's resources, workforce, markets and culture. For the most part, tribal members have a hard time creating sustaining jobs because of a number of roadblocks. In addition to the obstacle of remoteness, these include the ability to obtain collateral to obtain capital; access to financial services; technical know-how to access what capital is available; and the legal, corporate and judicial infrastructure necessary to assure participation by outside investors. Historically, it has been tougher for Native Americans to obtain financing than perhaps any other group in the United States because they own no land in fee to offer as collateral for loans. Lenders are also reluctant to enter financing agreements because tribes are sovereign and lenders see limited venues to resolve disputes with tribes in court. Because trust land cannot be used as collateral for a mortgage or loan, the lender has no ability to foreclose on them and then sell the land, which severely decreases the amount of capital that can flow into Indian country. Ready access to investment capital has enabled many generations of other Americans, including recent immigrants, to launch small businesses. As we know, small business employs one-half of all private sector employees. But this has not been the case for Native Americans. According to the 2003 report by the Kauffman Center for Entrepreneurial Leadership, Native Americans owned and started the fewest small businesses of all minority groups in the United States. Without capital, there is limited enterprise, and without enterprise, there are few jobs. Native Americans want to honor tribal traditions and culture, while achieving better lives for their families. They are willing to work hard to accomplish that goal, given the opportunity. The department recognizes these issues and has committed both budget dollars and personnel to address each of these roadblocks to economic progress in Indian country. As I mentioned, I am director of the Office of Indian Energy and Economic Development. It was an office that was initiated about 1 year ago by the Secretary of the Interior by a secretarial order. We have pulled together four components that we believe are important to the economic development in Indian country. Under my office, we currently have the Office of Workforce Development, which you know as the 477 program. We have pulled in the Division of Economic Development, which we are using to identify business opportunities in Indian country. I currently have under me the Indian Guaranteed Loan Program, which allows us to provide capital to Indian businesses. I have the Energy and Minerals Division, which is located out in Denver, which provides technical assistance to Indian communities in developing their energy and mineral resources. In summary, I would like to say the Department of the Interior does not consider the status quo to be acceptable. I am sure that the distinguished panel that will follow me will talk about the needs in Indian country. We stand ready to work with other Federal agencies and the Indian community to address economic development for tribes. We believe we now have a team in place that will work with tribes and individual Indian entrepreneurs to aggressively pursue solutions. I thank you again for the opportunity to testify today, and I would be happy to answer any questions the committee may have. [Prepared statement of Dr. Middleton appears in appendix.] The Chairman. Senator Dorgan, would you like to make an opening comment? STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS Senator Dorgan. Mr. Chairman, I will just put my statement in the record, and only say that this issue of economic development is critical because we have Americans among us who are living in third-world conditions with little opportunities for jobs and the progress that comes from having those jobs, with a stable income. I really appreciate the fact that we are holding this hearing. I will ask that my statement be part of the record. The Chairman. Without objection. Senator Johnson. STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM SOUTH DAKOTA Senator Johnson. Thank you, Mr. Chairman, for holding this hearing. I, too, will submit my opening statement for the record. I have some questions for the panel. But I would share Senator Dorgan's observations that I think one of the most critical issues we face in Indian country is the development of a much more robust private economic sector. As was pointed out to me by one of the tribal chairmen in South Dakota, Chairman Bordeaux at Rosebud, he indicated to me that about 85 percent of the money that goes in wages on the Rosebud, about $130 million, leaves the reservation. There simply is no, or very little, private sector economic activity going on. Until more people have jobs and until there is a greater private sector presence, I think we will be forever behind the curve in terms of government programs. So I appreciate your holding this hearing. I also want to welcome Elsie Meeks and J.C. Crawford from South Dakota. Thank you. The Chairman. Thank you very much. Thank you, Dr. Middleton. I read your written statement, and I think it is an excellent statement. The average unemployment rate for self-governance tribes is 35 percent, which is still terribly high, but it is much lower than the average of other tribes. How do you explain this significant differential between self-governance tribes' unemployment and non-self-governance tribes? Mr. Middleton. We think that a self-governance program is really of great value to the Indian tribes. It does help them take advantage of the opportunity to manage their resources, to manage the money that flows into the reservation, to identify job opportunities and economic opportunities on reservation. We think that as more tribes start moving toward self- governance and start identifying what the shortfalls may be for developing job opportunities on reservation, or in fact develop a workforce that can work off-reservation, the better off the Indian community will be. We are standing willing to help any tribe willing to work toward the self-governance philosophy to do that. The Chairman. It is my impression that movement toward self-governance has slowed down recently. Is that true? Mr. Middleton. That is also what I have heard, yes. The Chairman. You might look into that because it seems pretty clear, like most of us who were strong supporters of self-governance, that there would be a variety of improvement associated with self-governance, including more job creation and lower unemployment. It is just the nature of the kind of government that allows people to basically govern themselves and make their own decisions, rather than have them made in Washington. The report reflects that the Coushatta Tribe of Louisiana has an unemployment rate of 97 percent, yet this tribe has a casino that must create many jobs. Can you explain that? Mr. Middleton. I am sorry, Senator. I am not familiar with that particular case. The Chairman. Do me a favor and get us a written response, will you? Mr. Middleton. We will do that. The Chairman. Here is a casino tribe that obviously made a lot of money because they gave a lot to Mr. Abramoff. I would be curious why a tribe like that, with a functioning casino, a money-making casino, would have such high unemployment. How do unemployment rates for tribes with casinos generally compare with those for tribes without casinos? Mr. Middleton. In the experience that I have had, typically the tribes with casinos do provide additional employment to the tribal members. I know this is particularly true with the Oneida Tribe in New York. As far as a broad-based statistical analysis, we would be glad to provide that to you after the hearing. The Chairman. We would be interested in that, too. I understand from your written statement that there is a different way to calculate unemployment on Indian reservations in Indian country, as opposed to non-Indian country. But some tribes have reported 100 percent unemployment. How is that possible? Some people are employed by the tribe. Mr. Middleton. The information and the data that is reported is certified by the tribes and then verified by our agency superintendents, as well as the regional offices of BIA. This is the only labor report that actually is certified by the tribes as being accurate. Based on checks that we have been able to make, we believe that the numbers are accurate, but I will have to look at the 100 percent number and see. It may be 99.8 percent and rounded up, but we will have to check on that. The Chairman. You mentioned that one of the traditional ways that people or groups get financing is through putting up land for collateral. Obviously, you are not suggesting that Indian tribes do that. Mr. Middleton. No; we are not. We are just indicating that it is a reason why capital investment and collateral and lending is not available to the tribes readily. The Chairman. So then they have to find other means of collateral. What would that be? Mr. Middleton. Well, that is one of the difficult roadblocks that we are trying to face. Absent gaming, though, we feel that in many cases energy and mineral development for tribes are probably the largest opportunity for tribes to be able to develop economically and economic opportunities on reservation. That is why we are taking and providing a focused effort on looking at what energy and mineral resources may be available to the tribes to develop, and we are helping to provide technical assistance to them to do that. We also believe that the energy bill that was recently passed, title V, which allows tribal energy resource agreements to be developed, would be a very valuable and useful tool to help tribes develop economically and help develop their energy and mineral resources. The Chairman. I always thought one of the most underutilized aspects of Indian reservations was tourism. Do you have any thoughts on that? Mr. Middleton. Yes; as a matter of fact, we are looking at a number of opportunities to help provide tribes some support to develop business plans for a tourism industry. We think that it could be a very valuable part of what tribes can do to in fact promote economic development on reservation. It obviously could not be a total panacea, but we think it could be a very valuable key portion of what tribes can do to foster business development. The Chairman. Senator Dorgan. Senator Dorgan. Dr. Middleton, tell me about your agency. You are the Director of the Office of Indian Energy and Economic Development. What are the resources that you have? How many people and how many dollars? Mr. Middleton. Actually, the office, we are just finalizing the changes in the departmental manual that will establish the boxes, if you will, that make up this office. We currently have approximately 35 people on board with an FTE limit of about 45 folks total. I have 15 people, plus some contractors, working on energy and mineral development. I have plans to have seven or eight people in our Economic Development Division. We have four people working on our Guaranteed Loan Program, but in addition we have 10 regional loan officers, that although they do not report to me, we work closely with them in the regions. We have five people that are managing our 477 program, our Workforce Development Program. Our resources that we currently have total approximately $18 million cross all of the divisions. We have been fortunate that the administration is very supportive of the energy bill that was recently passed and the budget that came up from the President contained an additional $2 million to help us implement title V of the energy bill, with $1.4 million available for grants that be given to tribes to help develop tribal energy resource agreements, and $600,000 that will allow me to add three or four additional staff to help implement the program. Senator Dorgan. So there are about 40 people and $18 million? Mr. Middleton. Yes; roughly. Senator Dorgan. Roughly. You also mentioned contractors. Are you spending money on contracts? Mr. Middleton. We do, but the contract support is mostly for our IT support out in our Mineral Development Office. Senator Dorgan. Tell me, if you would, what are the high points or the achievements that you could point to? You told us in your statement what you are aspiring to do and so on. Are there some things that you can describe to us that result from this expenditure and from this attention? Mr. Middleton. I believe so. We actually have had the opportunity of establishing a number of new and what I think are innovative programs, trying to focus our efforts working with tribes, as well as other institutions. We, of course, are major sponsors of the Reservation 2006 Economic Development Conference that was held in February of this year. We think that it was a valuable opportunity for tribes to not only be able to provide information to each other on economic development opportunities, but also opportunities for non- tribal, non-Indian members to know what opportunities are available in Indian country. We have also sponsored in White Earth a loan conference where we are trying to educate lenders on the opportunities for lending capital in Indian country. That was a great success, attended by about 150 people. We plan on expanding that effort and holding it in each of the region's that are available so that we can marry up the capital investment community with the needs that are identified in Indian country. This week, we are holding a conference in Minnesota to talk about procurement, because we think there are great opportunities for tribes to participate in the Federal procurement process. We are working across government lines to be able to provide that access to tribal governments. We are partnering with SBA, as well as with DOD, to look at the opportunities for procurement. In addition, as a result of an effort by the White House to identify economic development opportunities in Indian country, we have an executive leadership group made up of representatives from across the Federal Government working in Indian programs. I chair an effort, working with the Department of Labor, Department of Commerce, Department of Energy, USDA, Small Business Administration, as well as EPA and a number of other agencies, to see if there are ways that we can in fact use the various programs we currently have working in Indian country, and leverage those resources and work cooperatively to have a better effect that we are having individually. Senator Dorgan. Mr. Middleton, I think that the conferences you suggest make a lot of sense. It seems to me you have to provide information. I am going to ask the next panel as well what impact does your organization have on their lives; what kinds of assistance are you providing. It is a fair amount of money, $18 million and 30 or 40 employees. I obviously want you to succeed and I appreciate your being here today, giving us a status report. The Chairman. Senator Thomas. Senator Thomas. Thank you, Mr. Chairman. Sorry I missed the first part. I am very much interested, however, in this issue, and particularly the energy and minerals aspect of it. You mentioned in your statement that the potential there is to produce over 5 billion barrels of oil. What progress has been made? What is the main obstacle to moving forward? Mr. Middleton. I think we have actually made some very significant progress with our energy and minerals program. Part of the $18 million that we have available actually goes out as technical assistance grants to tribes to help identify and evaluate the resources that they have available. Just this year, we made approximately $4.1 million available to over 40 tribes to help develop their opportunities in energy and mineral development. I will be honest with you, though. I think that we do have some hurdles to overcome. Even though we are looking at hydrocarbon and renewable energy development, sometimes the remoteness of the communities does make it difficult. We believe that it is important that we move a number of the tribes, or allow a number of tribes to have the opportunity to move from simply being landlords over their energy and mineral resources, to partnerships, helping to develop their energy and mineral resources so that there is value added, because that added value also brings additional income into the tribe itself. We also think, as I mentioned, that the tribal energy resource agreements that are authorized under title V of the energy bill are going to be a significant opportunity for tribes to move to one of being a partner or being actually a developer of their energy and mineral resources. Part of the issue really is that many tribes have come to us and they would like to do things like set up ethanol plants using biomass they have available. They would like to put in place refineries. They would like to have an opportunity of developing their wind. All of this is very highly capital- intensive. What we are trying to do is find ways to marry together the capital investment market with the needs that are demonstrated out in Indian country. Senator Thomas. How about those potentials for energy production that someone else is willing to do? It doesn't take capital. It provides jobs. It provides revenue. All you have to do is make the leases and go. Mr. Middleton. Exactly. My folks, the division out in Denver works extensively with tribes to provide them technical support. Typically right now it is under the Indian Minerals Development Act and the Indian Minerals Development Act agreements. We are working with tribes, those tribes that choose to develop their resources, to find adequate partners so that we can work closely on developing those agreements. Senator Thomas. You say ``who choose to.'' Is that the problem? Mr. Middleton. I am sorry. I missed that. Senator Thomas. You said ``who choose to.'' Mr. Middleton. Yes. Senator Thomas. So some of the tribes are not wanting to develop it? Is that it? Mr. Middleton. We found that many of the tribes are wanting to develop, but some tribes actually feel that development of their mineral resources may be happening a little too fast and they want to make sure that it fits well within their culture and their beliefs. We respect that. As Senator Dorgan pointed out, we do have some limited resources and we are trying to use those resources toward those areas where we feel we have a better idea of success. So we are trying to target those resources in helping the tribes that have come to us and asked for help. Senator Thomas. Thank you. The Chairman. Senator Johnson. Senator Johnson. Thank you. I took with interest your reference to Buffalo County, SD as the poorest county in America, home to the Crow Creek Indian Reservation in South Dakota. Several of the other most impoverished counties in America are also South Dakota Indian counties. I would note that the school dormitory at Crow Creek burned town earlier this year, last year. And the rest of their school is a temporary replacement as well. It is a school where they have been maintaining annual yearly progress. It has been a successful school, but at the rate we are going with school replacement, it is going to be literally years and years before these children in America's poorest county have an actual school building to go to school at. I know this is outside your bailiwick directly, but I have to note that as you bring up the question of Crow Creek. Also in my meetings with Native business leaders, and there are more of them, and we do now have a Chamber of Commerce and some other infrastructure in place, which I am grateful for, but one of their observations is one of the greatest hurdles, and there are many, but one of the greatest hurdles to Indian entrepreneurship in Indian country is the BIA itself and its leasing mechanisms, which have been a huge obstruction for Native leaders who would like to begin a business. It takes years to negotiate a lease with the BIA which is set up to deal with grazing leases, but is uncooperative and unhelpful in terms of small business development in Indian country. They wind up with short-term leases and once they get one, then they have to come up with the capital to build a building, and then they run into the collateralization issues that you raised, which cause still further problems. So I think in too many cases, the BIA has been part of the problem instead of part of the solution when it comes to the development of entrepreneurship and Indian owned businesses in Indian country. That also, of course, affects home ownership. Home ownership has been one of the great mechanisms for the development of the middle class, of all Americans, and yet because we have not come up with an entirely adequate collateralization process, we wind up with people who simply are mired in a low income status and are not in a position to generate the wealth that ordinarily could come with the ownership of a business or housing. Two questions I want to raise with you. The SBA, CDFI, and USDA rural development funds have all been under tremendous financial pressure in recent years. I wonder if you would share any thoughts with us about the importance of those programs as funds that generate not only capitalization, but business training skills and business planning skills. Are they important programs in the overall scheme of things, as far as you are concerned? Mr. Middleton. I believe they are. Actually, we have been working closely with all of those programs to find ways that we can take advantage of the resources that we are currently using out in Indian country. I think their success really speaks for itself. I think they have been valuable programs. Senator Johnson. Well, they are very small programs, but they are ones that have been under tremendous financial stress. So I would hope that we could work together with the White House in bipartisan fashion, that while we are under a lot of financial downward pressure these days, that we do hold onto programs that do truly involve investment. The last question for you, is on the energy side of what you do. You made a brief mention of this, but my tribes in South Dakota tend not to have a lot of natural resources, other than agricultural land that they have. But they do have in many instances the potential for significant wind energy development. There has been some modest progress in that area, but very modest. Can you share with us any thoughts about what your office could do to enhance the wind energy capabilities of some of these tribes? They are very remote, as you say. Their infrastructure is not adequate, but there is some income generating opportunity from the full development of those resources. Mr. Middleton. Yes; it has been an issue. We have been working very closely with the Intertribal Council on Utility Policy, which of course is a strong wind advocate. We also did provide funding for the single turbine that was put up in Rosebud. We are working diligently to try and develop our renewable energy resources. In this last year, we put forward about $1.5 million in grants, a significant number of which were wind development grants to try and address the feasibility of wind development in Indian country. As I am certain you are aware, many of the tribes have access to much wind, but they do not have access to the grid. It has been an issue getting the interconnect so that the economics of putting up an wind plant or a wind farm to kick in has been difficult because you really don't get the economics to come in and be able to get the lenders to put capital into this until you are able to sell off your excess and use the green credits and use other activities that allow you to do different things when you have access to put the electricity on the grid. I know that there are some provisions in the energy bill that are taking a look at this, but we are also looking at it, and we have been working with the Department of Energy to see if we can find some solutions to this. Having access to the grid is what really is going to be important for some of the Northern Plains tribes. Senator Johnson. Thank you. We do have some of the tribes that are located actually quite close to the existing Pick Sloan hydro dam system in South Dakota. It is my hope that at the very least that we could somehow find some interconnections there, because I do agree with you that transmission issues are difficult issues, but there are some instances where it would seem to me that we could make better use of existing transmission capabilities than we do. Thank you. Mr. Middleton. Thank you. The Chairman. Thank you very much, Dr. Middleton. You will get us some written answers to some of the question we have? Mr. Middleton. We will. Thank you so much. The Chairman. Thank you very much, Dr. Middleton. Our next panel is Joe Garcia. He is the president of the National Congress of American Indians; Tex Hall is the chairman of the Board of Directors of the Inter-Tribal Economic Alliance; Lance Morgan is chief executive officer of Ho-Chunk, Winnebago, NE; Elsie Meeks is executive director of First Nations Oweesta Corporation; and Miriam Jorgensen is research director of the Harvard Project on American Indian Economic Development of Cambridge, MA. Welcome. Joe Garcia, we will begin with you. Welcome back before the committee. STATEMENT OF JOE A. GARCIA, PRESIDENT, NATIONAL CONGRESS OF AMERICAN INDIANS Mr. Garcia. Good morning, everyone. Good morning, Chairman McCain, Vice Chairman Dorgan, and Senators, members of the committee. My name is Joe Garcia. I am Governor of Ohkay Owingeh and president of the National Congress of American Indians. I am happy to be here today to discuss how the Federal Government and the tribes can best support our efforts to achieve self-reliance and support of our communities through economic development. It bears repeating that real per capita income of Indians living on reservations is still less than one-half of the national average. The poorest counties in the United States are on tribal lands. Frequently identified barriers to economic development include a lack of access to capital; insufficient infrastructure; remote locations; complicated legal and regulatory status; and insufficient access to training and technical assistance, among others. Compounding the problem, tribal governments have a severely restricted tax base that makes it difficult to build infrastructure and fund basic governmental services. In addition, tribes are hamstrung in their ability to access other traditional governmental revenue streams such as tax-exempt bond financing. As a result, we rely upon Federal funding and what we can develop from tribal businesses to run our governments and to provide necessary services. Meaningful economic development is sorely needed. Recent studies indicate that the tribes are making progress, and that tribal self-determination is working. Tribal enterprises across a variety of industries are growing and thriving. Tribes, despite the barriers, are becoming more sophisticated in assessing the assets available to them for economic development and making the most of those assets. Tribes have also made strides in attracting outside investors into tribal communities and encouraging business development among tribal members. Native entrepreneurship is on the rise and, as respected researchers at Harvard University have found, this progress is due to increased respect for self- determination. I would like to spend a few more minutes this morning focusing on a few opportunities for action that are currently before this Congress. First is streamlined sales tax. I mentioned earlier that tribes have a limited tax base. However, some tribes have begun to turn to sales taxes as a key source of revenue to build infrastructure, and infrastructure, simply defined, is not just the physical infrastructure or fiscal, but the human resources is consider as infrastructure. For example, the Navajo Nation imposes a reservation-wide sales tax and collects over $14 million annually to provide government services. Other tribes like the Reno-Sparks Indian Colony are able to use their sales tax revenue to back tax exempt bonds. Reno-Sparks recently built a hospital with tax exempt bonds backed by its sales tax revenue. Senator Dorgan, you are one of the primary sponsors of the streamline sales tax legislation, which will give Federal authority to the States to collect taxes on remote sales. We would very much like you to consider including tribal governments in the legislation. Just like North Dakota or Puerto Rico, a tribal government collects sales tax and they need the ability to participate so that they can collect taxes on remove sites and be a part of the new sales tax collection system. With a more stable tax base, we can provide the infrastructure that will make economic development happen and more successful in Indian country. Tax exempt bond financing. Another obstacle preventing tribes from accessing capital is the limitations on tribal tax exempt bond financing. Under current law, tribes may issue tax exempt government bonds only for facilities used in the exercise of a ``essential governmental function,'' a restriction that does not apply to State or local governments. The Audit Division fo the IRS has adopted an extremely restrictive view of an essential government function. In their view, if it earns revenue, it can't be an essential government function. But of course, it is hard to repay a bond if there is no revenue. The IRS Audit Division has put a chill on most tribal participation in the tax exempt bond market and prevented the use of what could be a valuable economic tool for tribes. This past fall, your colleagues in the House urged the IRS to move forward with a regulation to clarify this issue. Moreover, the IRS's own Advisory Committee on Tax Exempt and Government Entities acknowledged problems with enforcement in tribal tax exempt bonds. The tribes cannot even challenge the IRS in court because as the bond issuers, we are not the taxpayer. Legislation is needed that would allow tribes to issue tax exempt bonds or other financing obligations in a manner similar to States and municipalities. At the very least, we would like Congress to give us the standing to challenge the IRS mistakes. We urge you to join with the Senate Finance Committee in reviewing this matter. 8(a) Contracting. Several recent studies have identified the 8(a) minority contracting program as one of the most valuable programs for tribal economic development. The tribes participating in the program confirm this. The Federal Government buys over $200 billion in goods and services annually and the 8(a) and HUBZone programs provide incentives for Federal agencies to contract with tribally-owned businesses for the procurement of these goods and services. The positive impact of this program, particularly for tribes who have been unable to jump-start their economies through gaming, cannot be overstated. Revenue generated by tribally owned 8(a) companies allow the tribe to provide benefits and services to the community as a whole. Committees on both the House and Senate sides have indicated that they will be holding hearings to examine Native participation in the 8(a) program in the upcoming months. I think there is a great deal of confusion about the differences between tribal participation in the program and participation of other individual minority business owners. The Chairman. Mr. Garcia, I am going to have to ask you to summarize, since we are over time. Mr. Garcia. Okay. The other thing that I would simply like to reflect on a little bit, and it is provided in my testimony, is that there are opportunities for government-to-government relations in such items as telecom. It is a major effort. On trust reform, we need to be sure that that gets done because as we are tied up in trying to provide some solution to that, efforts in the economic development, education and other areas, that the Federal Government is to help with Indian country, is stalemated. So I would appreciate it if we could move forward those kinds of agenda. I appreciate the opportunity. Thank you. [Prepared statement of Mr. Garcia appears in appendix.] The Chairman. Thank you very much, President Garcia. Yours and all the witnesses' complete statements will be made part of the record. Tex Hall, welcome back. STATEMENT OF TEX HALL, CHAIRMAN OF THE BOARD OF DIRECTORS, INTER-TRIBAL ECONOMIC ALLIANCE Mr. Hall. Thank you, Mr. Chairman, and members of the committee, Senator Dorgan, Senator Johnson. I have a different hat on today. It is the hat of the Inter-Tribal Economic Alliance. I am very excited to report about this wonderful organization which we established in 2001, whose sole mission is to develop economic development on reservations. So entrepreneurship, creating businesses and job on or near reservations, Alaska Native land, and Native Hawaiian communities, is critical to us. I was really appreciative of Bob Middleton's report on the BIA labor force, the current labor force in my neck of the woods and the Great Plains still with 70 percent unemployment. So I want to talk a little bit about how we are going about doing and putting a dent in some of that. I first want to talk about one of the initiatives that ITEA has done. It is focused on the SBA 8(a) program, so that is very critical to us. We formed a multi-tribal IT consortium so its gets the contract as an IT consortium and it subcontracts. We now have 12 Native businesses that include the Turtle Mountain Reservation, Cheyenne River Reservation, Three Affiliated Tribes. I see the chairman for the Shoshone Tribe, Ivan Posey is here from Wyoming, Wind River. They are in there. The Tlingit-Haida from Alaska, and Hawaii and so on and so forth. So those are 12, and we really appreciate the initial efforts of Senator Inouye and Senator Stevens. This is on digitization of defense contracts. So in working with the defense and the Defense Committee, we are initially get $34 million to digitize. One of the key things is we have a teaming relationship with these tribes with DCL, Data Conversion Laboratories out of New York City. So with that expertise that they have, combined with the 8(a) program that ITEA has done with its IT consortium, we were able to solicit that initial $34 million and now $80 million in contracts that are critical to creating 350 jobs on our reservations. So that is key in how that actually works, and how to use that 8(a) program, and use a teaming agreement with experts like DCL to create the expertise and job opportunities on our reservation. So that is very critical to us. We want to continue in other businesses because we showed success in the IT. We want to go to energy, the Multi-Tribal Energy Consortium, that ITEA is going to build another for-profit leg that will sit next to the ITEA and we want to focus on oil and gas, wind, solar. And so we want to move to natural beef, buffalo, natural food products. And we want to also move into a construction consortium, and finally a MTEF, a multi-tribal enterprise fund, where we would like to work with the gaming tribes, those that have success in the gaming tribes that are near large markets, to contribute to this venture capital fund that we can fund these many projects that we currently have problems in collateralization, as Mr. Chairman you mentioned, and members of the committee had mentioned earlier. We want to be able to create this fund with gaming tribes' help, and those tribes that don't have successful gaming. So we really want to show that it works. I think, Chairman McCain, you were actually at one of our companies up in Barrow, UIC, and visited one of our ITEA companies, so you have probably seen Native people up in Barrow actually working and doing this digitization for the Department of Defense. And so our whole initiative at ITEA is to create 200,000 jobs. We have a ways to go, but we created 350. As we look to develop these economies, if you drop back to energy, for example, there are some obstacles. In my tribe, we are trying to build a refinery, and again I was appreciate. Bob Middleton has been very supportive of our refinery project, but we had some additional work in our EIS that EPA was willing to give moneys, but they don't have 93-638 contracting capabilities. They can't provide money directly, so it has to get transferred to BIA. But BIA said, well, we can't do that because the work has already been done in terms of the contract with our water quality studies, so the moneys we want to get, $112,000, was to be put back to the EPA. So there are obviously some problems in 93-638 that EPA doesn't have and they are trying to give money, but it is going to get put back because the work has been already done. So there are some problems within the 93-638 in terms of other agencies being able to use this. So in closing, what we are really trying to say as ITEA is we would like to ask the committee to be our partner. We need the Senate Committee on Indian Affairs to be a partner with this national effort that we at the Inter-Tribal Economic Alliance are trying to do with creation of our for-profit businesses. We have developed or are developing a multi-tribal air ambulance company. This will be the first of its kind. We rolled it out in Sioux Falls 2 weeks ago. Rosebud and Pine Ridge were the first two tribes to sign on. Again the success of ours is a teaming agreement, and so we have a company out of Minneapolis that has eight airplanes to provide air rescue within that golden hour, but they would have to renovate our airports on the reservations in order to have the air ambulance come in and go to a trauma, at least a level II trauma center, which in my case would be Bismarck, ND, and would be 39 minutes by air. By car, it would be just under 3 hours. We would lose that golden hour. So that is another for-profit company we are working on. And of course the third party billing to pay for that would be Medicaid and Medicare. So we are very appreciative of this time to testify. But again, we are looking to have the Senate Committee on Indian Affairs partner as we look to create this 200,000 jobs initiative. Thank you, Mr. Chairman. [Prepared statement of Mr. Hall appears in appendix.] The Chairman. Thank you very much, and welcome back. Mr. Morgan, welcome. STATEMENT OF LANCE MORGAN, CHIEF EXECUTIVE OFFICER, HO-CHUNK, INC. Mr. Morgan. Thank you. I appreciate the opportunity to testify. I am the CEO of a company called Ho-Chunk, Inc., which is owned by the Winnebago Tribe of Nebraska. In 1994, the tribe had a modest casino operation, and they decided that they would want to diversify their economy, and that is the company that I have run for the last 11 years. I was the first employee. We now have 525 employees. The first year we started, we had revenues of $400,000. This year, we will have revenues close to $150 million, all completely non-gaming. We are a tribe with basically 4,000 members and primarily centered on a town with 1,500 people. So we have been able to have a broad impact. We now have more jobs than working age tribal members in our community, so it is something that we are very proud of. When I think about this, though, we really are an exception in a lot of ways because of the difficult environment that we have to function in. I am not going to belabor it because several panelists have talked about the trust land system, but it doesn't allow us to have property taxes, so no taxes and bonds, no home ownership, no inter-generational wealth transfer, no collateralizing on loans, those kinds of things. So it pretty much is the most difficult environment possible to do development in the United States. The Federal Government has been pretty aggressive in developing programs that are designed to implement or designed to emulate the American economic system off the reservation, but they are usually limited in scope and don't have enough impact. So tribes are told to go into business. If you don't have a tax base, you can't develop your own economy. The Federal Government encourages us to go into business and use those profits in lieu of the taxes to develop the economy. The tribes with no collateral, no experience, no wealth, no capital, and going into business usually don't mix. What we have done over the years is exploit tribal jurisdiction. If you think about it, there is a bit of a stereotype of the types of business tribes function in: Gas, tobacco, and now gaming. Those are not tribal businesses per se. Those are businesses that we can get into that allow us to exploit our jurisdiction and create an advantage. The problem with those types of businesses is that they are controversial. They tend to interfere with State rights or they tend to upset the playing field for non-Indian economic interests that are already entrenched. So we do not believe that those are the future. Now, Ho- Chunk, Inc., is a company that has been in those businesses, since we have exploited them, and we have made the decision that we want to focus on other things. In the last 5 years, we have purchased a home manufacturing company. We started a construction company. We started an office supply company, a marketing company. But all of those are nice companies, but the thing that had the most potential for us to grow beyond attracting gamblers and smokers to our reservation, was Government contracting. We started a government contracting company, and for 4 years we lost money on it trying to figure out how to do it. I think there are some shortcuts probably we could have thought of, but we like to do it the hard way. We have built up a company that now has operations in three different countries doing vital things for the Federal Government, things that we can take pride in. What is interesting about this is that we have just figured out how to do this. It is a key way for us to develop our economy and diversify it away from these kinds of controversial businesses. Now, we are suffering some kind of attacks on it. I think it is completely unreasonable that that is happening. The Federal Government set up this system. They told us to go into business. They set up some incentive programs. We invested hundreds of thousands of dollars to get into it. And now we are just starting to be successful in those areas, and it is really elevating our level of sophistication across the board. And now we have to look over our shoulder, and I think it is completely unfair. I would ask you as our leaders to figure out a way to help us in this regard. This system, this trust land economic system is not a system that we created or designed. We are desperately trying to figure out ways to function within it. And things like the 8(a) program are very important. I thank you for your time. [Prepared statement of Mr. Morgan appears in appendix.] The Chairman. Thank you very much. Ms. Meeks, welcome. STATEMENT OF ELSIE MEEKS, EXECUTIVE DIRECTOR, FIRST NATIONS OWEESTA CORPORATION Ms. Meeks. Thank you, Chairman McCain and Vice Chairman Dorgan. Although I can't see Senator Johnson, I know he is there. [Laughter.] Thank you for the opportunity to appear here on behalf of First Nations Oweesta Corporation and the Native Financial Education Coalition. My name is Elsie Meeks. In addition to my role as the executive director of Oweesta and chair of the Native Financial Education Coalition, I am appearing before you as someone who has, although I didn't know I was going to dedicate my life to, I have, to the importance of private enterprise development on reservation communities. I have come to believe that unless tribal members are given the tools and opportunities to build assets we will never become self-sufficient and independent. Home ownership and small business development can stand on their own as important initiatives, but at the end of the day unless we start to build assets individually, we are never going to become independent. So my journey began more than 20 years ago, as I said, when we launched the Lakota Fund on the Pine Ridge Indian Reservation, with the mission of creating a private sector economy through financing and capacity building for entrepreneur development. Now, a couple of years after we started lending, we did a little study that showed that 85 percent of our borrowers have never had a checking or a savings account and 75 percent have never had a loan, or it was the other way around, and only 5 percent of them had ever been in business before. So we were tackling a really big job. My testimony is also informed by my role as the chair of the Native Financial Education Coalition that Oweesta has worked to spearhead. This coalition is a testament to our conviction that financial education is at the very foundation of effective economic development in all communities, and especially Native communities. And also, you know, it is a truism of economic development theory that credible institutions are essential to successful development, yet most Native communities lack nonprofit institutions that are taken for granted in most other communities, and many lack a developed private sector economy. Dr. Middleton also referred to the Treasury study that showed the lack of financial institutions on Indian reservations. So to address this need, Oweesta's main goal is to help Native communities create Native community development financial institutions. These are community based organizations that really work on the ground and they bring the need for accessible and affordable loans and other financial products, and they are always tied to intensive training and technical assistance for its borrowers. CDFI has been around for years, but when Congress created the CDFI Fund under the Department of Treasury, there were very few established Native CDFIs. Today as a direct result of the CDFI Fund, there are over 80 Native financial institutions in various stages of development and certification, including 36 of them, Native CDFIs, are now certified under the CDFI Fund. In my written testimony, what we see as integrated asset building strategies, which start with, there is a graphic in your written, starts with the need for building these institutions, Native community development financial institutions, organizations like Ho-Chunk, Inc. and other non- governmental organizations, that then provide tools such as financial education, entrepreneurial development, homebuyer education, and then the outcomes of that are home ownership, entrepreneur development and human capital, which in the end then results in healthy economies and strong communities. And so it is really this holistic approach. Just to give you some really fast, and I am probably running out of time, but in South Dakota we have done a pretty good job of the tribes there developing CDFIs. This is all foundational work, so it is going to take some time to get to where we need to be. Even at Pine Ridge, which is probably one of the most difficult places to work, we have already seen an increase in per capita income, a decrease in unemployment. This has all come about from these small businesses. The mention of this high unemployment rate, you know, it has been historical at Pine Ridge. We have had high unemployment for many, many years, so people a lot of times don't even, you know, the workforce isn't developed. And bringing in these big companies that employ a lot of people, sometimes it has been very difficult. But through each small business, they have hired 5, then 10, then 15 and 20 employees, and have really started to build this workforce in a very slow, but I think quality way. Arizona has 11 Native financial institutions. The Navajo Partnership for Housing, for one, has just initiated a Navajo nationwide financial literacy campaign, and offered homebuyer education to over 2,000 community members. There is a lot of activity with the tribes in Arizona. In North Dakota, Three Affiliated Tribes is just now developing one. Turtle Mountain has been in the process. In Wyoming, the Wind River Reservation has developed the Wind River Development Fund which has been a very strong CDFI, and I think has really helped the tribe in helping to create a UCC code. So they are all very foundational and they are about system building. One of the quick recommendations I would like to see is I would like to see CDFIs, a lot of them are already lending, of course, and as they develop and become a more important institution in their communities, be able to utilize the BIA guaranteed loans. That is not possible at this point, and also the SBA guaranteed loans. I would also like to echo Senator Johnson's remarks about improving the title status reports and the ability to use land as collateral. It is an incredible mess at this point. I don't understand why it is something we can't fix. So I will conclude my remarks, but again, thank you so much and I have longer written testimony. So thank you. [Prepared statement of Ms. Meeks appears in appendix.] The Chairman. Thank you very much. Ms. Jorgenson. STATEMENT OF MIRIAM JORGENSEN, RESEARCH DIRECTOR, THE HARVARD PROJECT ON AMERICAN INDIAN ECONOMIC DEVELOPMENT Ms. Jorgensen. Chairman McCain, Vice Chairman Dorgan and distinguished members of the committee, which I guess at this point is Senator Johnson. I also want to give a special greeting to you, because while you would not know it from my institutional affiliations, I was also born and raised in Vermillion, SD, which affects a lot of the perspectives and viewpoints that you will hear today. My name is Miriam Jorgensen. I am research director of the Harvard Project on American Indian Economic Development. I also hold a parallel position at the University of Arizona at the Native Nations Institute for Leadership, Management and Policy, which is part of the Udall Center for Studies in Public Policy. It is really a joint research enterprise that we undertake. For nearly 20 years, the Harvard Project and the Native Nations Institute have been focused on a central research question: How, amidst the widespread poverty and social distress that characterize Indian country, are an increasing number of Native nations breaking old patterns and building societies that work? What explains the stark differences that we see in Indian country? I really do mean ``stark differences.'' For a long time, before we had very good data about what was going on in Indian country with regard to gaming, we used to present information of the pre-gaming era, and say, look, there are a number of Native nations that are really pulling away from the pack and demonstrating economic and social success. Now, when we have a lot of data about the 1990's and the rise of gaming in Indian country, we still see remarkable diversity. There are gaming and non-gaming tribes at the top of the distribution, where per capita incomes for Native reservation residents in 2000 were double their inflation adjusted per capita levels in 1990, and we have gaming and non- gaming tribes at the bottom of the revenue distribution or growth distribution, where per capita incomes in 2000 for Native reservation residents were barely holding pace with inflation adjusted 1990 levels. I think these data reinforce the fundamental question that our research has been addressing: Where it is occurring, how and why did economic development occur? In answer, our research points to the important roles of institutions, culture and sovereignty. Now, I think many of you are familiar with a lot of that research, and I don't want to rehash it. It is presented in my written comments. Today, I want to focus just on one element of that. And indeed, I think you have heard a lot of policy recommendations that underscore this idea, and it came up in your opening remarks as well, Senator McCain. I want to talk about this notion of sovereignty and self- determination as a broad policy and make a pitch for its creative and expanded implementation, because I think it has made a lot of difference in Indian country. What I want to explore right now in my oral remarks are what I see as four important linkages between practical sovereignty and self-determination and economic and community development in Indian country. I want to explore those links, reinforce them, and hopefully provide you with some ideas for policy action. The first link is one of institutional design. Governing institutions provide the foundation on which economies are built. They provide a rule of law, help resolve disputes, and smooth the processes of business interactions. But to be effective in these roles, institutions must also be legitimate. They must reflect the society's beliefs about how power and authority ought to be distributed and exercised. This is a consonance that in our research we call ``cultural match.'' It is the leading reason why self-rule, practical sovereignty and self-determination matter. Sovereignty and self-determination make it possible for a Native nation to design its institutions with traction in a society. People will follow those rules, and the institutions are able to work in support of economic development and community change. The second idea that ties sovereignty and self- determination to positive economic outcomes is ownership. Self- determination and self-governance place resources squarely in the hands of Native nation officials and citizens. This leads to an increased sense of ownership over those resources, which in turn backs up the effectiveness of community development strategies. Ownership is about people coming to say, ``these are my resources; don't mess with them.'' The third link, accountability, is really the mirror image of ownership. In the direct service model, where Federal administrators manage programs, program managers are accountable to Washington and not to tribal citizens. But under a contract or a compact and other manifestations of self- determination and sovereignty, tribal government program managers become accountable to tribal citizens for how resources, both Federal resources and a tribal governments' own resources, are used. I want to point out here that the hard statistical evidence on this shift in accountability is unequivocal. From programs such as forestry management to health care, changed accountability through tribal takeover of program management improves program outcomes. And now there is also an additional, largely unsung, payoff to self-determination, and that is leadership development. Indigenous control attracts and provides a fertile training ground for talented leadership. These leadership skills result in more effective bureaucracy, creative programming, new economic opportunities, and even the expanded use of self- governance, so you get a virtuous cycle of economic growth and community change going in these communities. I just want to end my remarks with this pitch, that self- determination, and here I mean self-determination broadly conceived, not just the idea of Public Law 93-638 and its amendments, is the only Federal policy that has worked to alleviate poverty and social distress in Indian country. Without self-determination, the Federal Government invites increased and prolonged dependence on the Federal budget, and that is a lose-lose policy for everyone. [Prepared statement of Ms. Jorgensen appears in appendix.] The Chairman. Ms. Jorgenson, when you say self- determination, do you believe an integral part of that is self- governance? Ms. Jorgensen. I do. I want to be clear here that in a lot of ways, and I am subject to this myself, the terms ``self- determination'' and ``self-governance'' are captive to the policies that the Federal Government has put in place, while I want to talk about the ideas very broadly. The Chairman. Yes; but I was referring to the specific self-governance law that tribes are free to implement or not implement. Ms. Jorgensen. Yes; and in fact I make a point in my written testimony that says I really like self-determination policy in Public Law 93-638, but I like self-governance better, because I think there is a tendency under self-determination for tribes to simply self-administer programs. Their operations become an extension of the Federal Government, and that is not really taking advantage of the four points I have made here about how you really get creative programming and true self- rule, which is through good institutional design. That is only possible under self-governance where there is more freedom to design programs that work. So I really do like that policy better. I like them both, but if I were to rank them, the self- governance policy gets higher marks in my book. The Chairman. President Garcia, why do you think there has been such a slowdown in tribes choosing to exercise self- governance? Mr. Garcia. Sir, it might just be the policies that are set forth and may demonstration that policies are implemented or laws are made and Indian country proceeds with some of those, being active in those environments, and they become successful, and then new laws are made to sort of curtail their effectiveness and their success. The Chairman. What laws have been passed which would curtail their ability to exercise self-governance? Mr. Garcia. Well, the self-governance is different, though. I think we need to make a separation between self-governance. ``Governance'' means governmental services that are provided for Indian country and the tribal membership, whereas self- sufficiency and self-determination is about how do you succeed using not government, but the business side of it, and how you interface the two is an important piece. The Chairman. President Garcia, we passed a law concerning self-governance in, somebody knows what year it was. It was former Senator Dan Evans that was prime. It was in the 1980's. There were a large number of tribes that decided to exercise self-governance, according to that law. My specific question is, why is it that a number of tribes have not? At first, we had a large number of tribes who chose it, and by all reports it was a great success, but now there has been a slowdown. Maybe Tex Hall can give me his view of that, given your previous position. Mr. Hall. Mr. Chairman, I would say the number one issue is budget, funding, or lack of funding. You are correct. It is very successful, but tribes are hesitant because if they manage the contracts and the funding doesn't follow, then it goes cycle from year to year, then it falls flat on its face. So there was a great success. Really, a lot of tribes were involved with the self-governance, and those that are doing it, I think Bob Middleton talked about the statistics are very good, and probably Ms. Jorgensen, but it has slowed down because of funding. There is uncertainty among tribes of what is going to be in the Federal budget. The Chairman. What I don't quite get is the choice is not what the money is going to be in the Federal budget. The choice is whether it is administered by the BIA or by the tribe themselves. So I don't quite understand. I think there is a legitimate concern about funding of programs, but my understanding of self-governance is the decisions are made by the tribe or they are made by the Federal Government. Mr. Hall. Mr. Chairman, could I just comment? The Chairman. Yes; could I just say at the time of passage, we were worried, and we made it voluntarily for a number of reasons, but one of them was that some tribes did not have the infrastructure to administer their own programs. It seems to me that they have had a number of years now to set up that infrastructure so that they could then make the decisions at the tribal level that are otherwise made at the Federal level here in Washington. I think testimony that we have received over the years, including today, where unemployment is lower on self-governing tribes rather than not, I can understand the real concern about funding levels. But I am not sure how that would affect decisions as to whether to take whatever funding there is and make the decision on how to spend it at the tribal government level, as opposed to Washington bureaucracy level. Please respond. Both of you. Go ahead. Mr. Hall. Mr. Chairman, I just wanted to mention on Indian Health Service, the reason that tribes are reluctant to self- govern that program is because, let's use contract health. There is a report that says don't get sick after June because those funds run out around June 30, so they don't have enough money to go to the end of the fiscal year. The Chairman. Don't they run out no matter whether you are a self-governance tribe or not? That is my point. Mr. Hall. So it is a liability issue. Mr. Garcia. Let me respond, Senator. If you use the word ``success'' or ``non-success,'' I guess it would reflect that. If the appropriations don't follow the mandates and the services are to be provided by tribal government, then if the funds run out, that says that you have been unsuccessful in implementing programs that are for the benefit of the people. And so if the funds dry out and you don't provide as effective services, that sends the wrong message. I think there is a fear for those tribes that want to do that. They still hold the Federal government responsible for its fiduciary trust responsibility. So getting away from that would say, well, we de-obligate the United States for its trust responsibility, and that would hinder the progress. The Chairman. I think we are talking past each other. We appropriate a certain amount of money for Indian health care. It doesn't say ``this amount for self-governing tribes and that amount for non-self-governing tribes.'' We appropriate certain amounts of money for certain purposes. Now, I will freely agree, and all of us, or at least certainly a majority of us on this committee feel strongly opposed to any cuts in funding, particularly for Indian health care. I have never seen in any legislation saying ``this is for tribes that are self-governing tribes, and those are not.'' So we are talking past each other. I guess there is no point in continuing this conversation because I believe that the most efficient use of these Federal dollars, as they become scarcer, is the decisions made by the tribal governments themselves. Whether they are unsure of funding or not unsure of funding, they are still either going to receive or not receive the money. I think that every tribal government that I have talked to that exercises self-governance is more satisfied with being able to make the decisions themselves. Senator Dorgan. Senator Dorgan. Mr. Chairman, if I might just follow on that point. I think with respect to something Chairman Hall said, this issue of contract health running out of money in May or June, for example, and someone being very, very ill, in chronic pain, and it is not judged life or limb, in those cases the health care is not going to be available to them. My guess is that under self-governance, all of a sudden the tribe says, no, the reason it is not available is we are in charge and the money is not there. I think that gets to the liability question and who is responsible for the money not being there. I understand the point you are making as well. The Chairman. I understand that. And it is disgraceful that we should be in this situation. I think we are certainly in agreement on that. Senator Dorgan. Running out of money for contract health is in fact a disgrace. It is doing two things. Number one, it is preventing people who have serious health problems from getting the kind of health care they need. And number two, in certain circumstances, those who got the health care they needed and who fall into this gray area, and it is not being paid for, it ruins their credit because the hospital goes back after them because contract health doesn't pay for it. But let me ask a question. I guess first for Mr. Middleton. I have the 2003 report of Indian population and labor force report. Is there a new report? This is the last report issued? Mr. Middleton. It is the last report issued, but we are preparing the information right now and it will be out at the end of this year. Senator Dorgan. I think you are required to do that every two years, so I would expect that it would be out soon. I was looking at this because of the testimony today. I am trying to understand whether we are taking baby steps or making big strides in dealing with this issue of unemployment and trying to address some of the economic issues. Ms. Jorgensen's report suggests that we are making some progress. You have all suggested we are making progress. I am looking at this report. This is 2003. Let me just mention a couple of statistics: Fort Berthold, 71 percent unemployment in Fort Berthold. I want to ask about your anecdotal notions about are we making progress to whittle that down: the Pine Ridge Agency, Ms. Meeks, 87 percent unemployment; the Sisseton-Wahpeton Tribe, which is partially in North Dakota, 82 percent unemployment; the Standing Rock Sioux Tribe, 56 percent on the North Dakota side, 91 percent unemployment on the South Dakota side; Turtle Mountain Tribe in North Dakota, 71 percent unemployment. So we are talking about very high rates of unemployment in 2003. All of us understand the consequences of that. The consequences are devastating. The inability to get a job that pays well with benefits to allow you to take care of your family and do the things that give you an opportunity for a good life, those are gone if you don't have that opportunity. So let me ask whether you see now these numbers that we have. They are the latest numbers that exist. When the new report comes out, and I don't have any idea what these numbers will show, but the question I have is: Are we making strides? Ms. Jorgensen says we are. Are they baby steps or are they big strides? Ms. Meeks? Ms. Meeks. Well, I can speak for several reservations in South Dakota, primarily Pine Ridge. I think we are taking baby steps, but I think we are headed in the right direction. To tell you the truth, I don't think there is any way to do it but to take baby steps. That is why I am such a proponent of small business development because as I said, I have a grocery store. I have a business at Pine Ridge and we hire about 20 people. Let me tell you, we had to work very hard to get those 20 people, kind of get a core group, because people haven't worked for years. And so I know, and other business, Crazy Horse Construction, one I mention in my testimony, is hiring 20 or 30 people. And this has all come about in the last 10 years. So I am surprised that that report in 2003 says 87 percent because the South Dakota Business Review actually showed a decrease, and actually the fastest growing employment in any county in South Dakota, which is still not good. Senator Dorgan. Baby steps toward a goal can take decades, given how far the population is below the rest of the American population. So I am not diminishing what you said. The Chairman. When you said fastest growing employment, from what to what? Ms. Meeks. I actually can't even remember the percentages now, but compared to any other county in South Dakota, Shannon County, which is Pine Ridge Reservation, it had the fastest growing employment than any other county in South Dakota. So it is headed in the right direction. I mean, we are still at the bottom virtually. Senator Dorgan. It says, for example, just to use Pine Ridge, the latest report that we have as a panel says 87 percent unemployment. There were 3,400 jobs essentially and 2,800 of them were public sector jobs; only 576 private sector jobs. My guess is that all of us would agree that what we need to do in order to provide opportunity is to build the private sector. I know that is what Chairman Hall is talking about on the Fort Berthold Reservation. So as much as we can, we really need to get new numbers to find out what has happened; where are we moving and how quickly are we moving in that direction. Chairman Hall, this suggests that on the Fort Berthold Reservation we have 71 percent unemployment. In your notion, is that improving at this point? Mr. Hall. I think it definitely is improving. I think if we looked at the data today, 2006, it would be much less because we just had, it was 300 plus on the new Four Bears Bridge construction of tribal members and other tribes working, but now that the bridge is complete, that is our challenge. How do we provide, and I think that report shows available workforce in one of the categories, Senator Dorgan. That is the best thing that I got in that report is that unemployment is one thing, but available workforce is another. So it shows there is an available workforce if we can just create the opportunities. I think we are taking small steps. I would like to take larger steps, and I know Elsie, my good friend, is more on the entrepreneurship. I am more on creating large business contracts that are probably leaving our State and going somewhere else. We would like to keep those jobs within Indian country and our States. So we are losing opportunities. In natural beef, we don't have the capital to put feedlots of processing plants, but by doing a teaming agreement with somebody else, we could do it right now. So those are the kind of opportunities, like the IT that we are looking at. How do we create teaming agreements with corporate America, with people who have the expertise, to get those contracts and get those jobs created right now. Senator Dorgan. I might just point out, I just received information. The Indian Self-Determination Act was passed in 1975. The Indian Self-Governance Act, which expands self- determination, was passed in 1989. I share the belief of the chairman that this is a really important direction. I think the Harvard studies show this. I think the people best able to make decisions about what is promising, what works, what doesn't work, are the people who are running the tribes, the tribal government. So I agree with the chairman. One other point, I note, Chairman Hall, you and I have had lengthy discussions about this. President Garcia, you mentioned it, and Mr. Morgan, you did as well, the trust land issue, which is a real problem. When you talk about how do you develop new enterprises, create new business, startups and so on, you have to talk financing. When you talk financing, you talk now in present day circumstances about a huge disadvantage for tribal governments because they don't have the land base because of the trust land situation that most others would have to go to lenders and to go to others to say, here is the asset base we have, upon which you can lend. So we also need to begin thinking about how we address some of that. You have made some recommendations today which I think are helpful as well. But all of us, I think we are of one mind. All of us desperately want to find the key that unlocks opportunity here. It is not right in this country that we have pockets of poverty that exist similar to third world conditions. You can look at this and say 80 percent are out of work. It is not because they don't want to work. These are people that would, in my judgment, they would trade their circumstance in a nano-second for a good job that pays well with decent benefits, that would give them a chance to take care of their families. So, we want what you want, and I think it is very helpful to have you describe to us what you are observing and what your circumstances are, and the kinds of things you think could be helpful. Ms. Jorgensen, thank you for the work that you are doing, both in Arizona and at Harvard, trying to provide some focus and some spotlight on these issues. Mr. Garcia. Mr. Chairman, if I may make one small recommendation? I think it will impact a lot of Indian country, and that is that something we have demonstrated in Ohkay Owingeh, New Mexico is that because we have a tribal business, the Thay Corporation, when we planned out our business diversification, we basically kind of overcame the hindrances of leasing agreements with the Bureau and the requirements thereof by setting aside a commercial development sector, if you will, and defined that property. It is a major commercial development area, and we obtained a master lease signing the agreement one time with the Bureau, and agreed to that. So we then turned that over to the corporation, the tribally owned corporation, to do with it as it wished in terms of commercial development. So you by-passed a requirement that has been a hindrance in a lot of Indian country, and that seemed to help us move forward a lot faster. So something like that could be incorporated in a number of other tribes, and that would be a big help. Thank you. Senator Dorgan. President Garcia, thank you. I have to run, but as we conclude, I didn't ask you a question, Mr. Morgan, but I did want to say that your story and your success is very inspiring. Congratulations to you. Mr. Morgan. Thank you. The Chairman. Yours and the Choctaws are great, inspiring stories. Senator Dorgan, I know you have to run. We are about to wrap up here. I think maybe there has been some lack of attention to the self-determination, particularly self- governance issues. Maybe this committee could do a little research, helped by Ms. Jorgensen and others, and point out the success of the self-governance program and send a letter to the Indian tribes on behalf of this committee saying that we hope you will take another look at self-governance, since it seems to have lost some of its momentum, and yet it seems to have been rather successful for Native American tribes. We certainly would not want to mandate it, but at least we could point out to many of the tribes that at least for the overwhelming majority of tribes that have adopted self-governance, it has been very successful. Would you agree with that assessment, Ms. Jorgensen? Ms. Jorgensen. I would. I also think there is more that the committee can do than send a letter. The Chairman. All right. What would you like for us to do? Ms. Jorgensen. Congress can actually increase the incentives to take up self-governance. I think one of the things you have heard from the Honorable Mr. Hall and the Honorable Mr. Garcia is that tribes right now don't feel the incentive. Despite the fact that the research evidence shows that there are advantages, that is not translating to an incentive at the Native nation level. I think there are a variety of things, for instance investments in the administrative capacity, which you noted was discussed back in 1988 and 1989 when the legislation was passed. To be specific, maybe competitive funding streams made to develop administrative capacity could increase the uptake. I think there's also an oblique way of getting at it that is quite important. It relates to administrative capacity. It is echoed in some of the comments of Dr. Middleton about the labor force report. Tribes don't have the management information system capacity to generate a lot of their own data, to understand the success of programs, even know very precisely what their unemployment and employment situation is. Investments in that kind of capacity I think could make those points to tribes. The Chairman. Then I would like to have from the witnesses their recommendations. Maybe Senator Dorgan and I would reintroduce tribal self-governance II, mission impossible II or III. [Laughter.] Mr. Hall. The ratings aren't too good. [Laughter.] The Chairman. Well, Senator Dorgan will play Tom Cruise. [Laughter.] The Chairman. But maybe we could shape some kind of legislation to increase incentives for self-governance. It works, and it obviously is not being adopted by a significant number of tribes at this time. Maybe this is something valuable we could have learned from this hearing. By the way, President Garcia, Senator Smith is holding a hearing on May 23 in his subcommittee of the Finance Committee to address tax-exempt bonding in Indian country. Pay close attention to that, and we will work with Senator Smith because that area does fall under the Finance Committee, as you know. I want to thank the witnesses and I appreciate the testimony. You have re-motivated us. Thank you. [Whereupon, at 11 a.m. the committee was adjourned, to reconvene at the call of the chair.] ======================================================================= A P P E N D I X ---------- Additional Material Submitted for the Record ======================================================================= Prepared Statement of Hon. Byron L. Dorgan U.S. Senator from North Dakota, Vice Chairman, Committee on Indian Affairs Mr. Chairman, most of us in this room today are aware of the Third World conditions that continue to be commonplace in most Indian communities. While the United States maintains an unemployment rate around 5 percent, unemployment within Indian country continues to be near 50 percent, with some reservations in the Great Plains having an unemployment rate over 75 percent. Tribal communities continue to face extreme poverty, severe health conditions, overcrowded and substandard housing, substance abuse problems, and a weak education system. This is unacceptable. Similar to Third World Countries, many of these social issues faced by tribes are a result of under-developed and unstable economies and governments. But tribes are somewhat unique in that Congress and the Federal Government are partly to blame for the condition of tribal economies and governments: <bullet> \\\\\\Many tribes were removed from their traditional homelands. <bullet> \\\\\\In some instances the United States took the best lands on Indian reservations for our public projects. <bullet> \\\\\\Our Federal courts continue to limit tribal jurisdiction over their lands, and the tribes' ability to tax persons and activities that occur on their lands. The basic services that any local government can provide its citizens are dependent upon that government's ability to raise revenue, which is primarily done through taxation. Yet, Indian tribes lack a clear tax base. Now, I'm NOT suggesting that the Federal Government supply an endless amount of money or initiatives to build tribal economies, but we do need to recognize that many of the obstacles faced by tribes are a creation of the Federal Government. Nor do I believe that it is the Federal Government's responsibility to ensure that each tribe has a thriving economy. But it is our responsibility to look for ways to remove the hurdles to tribal economic development that we helped to create. The Federal Government continues to support the policy of self- determination and self-sufficiency for Indian tribes. However, neither of these objectives can be reached if tribes are not able to develop strong and sustainable economies. Each Indian tribe is unique, and thus, the development of each tribal economy will have unique attributes. There is no ``one-system-fits-all'' solution here. But I think that there are some basic elements that ANY successful economy requires: <bullet> \\\\\\Stable governmental institutions; <bullet> \\\\\\Governmental jurisdiction over its citizens and lands; <bullet> \\\\\\The ability of a government to tax persons and activities on their lands; <bullet> \\\\\\Physical infrastructure; <bullet> \\\\\\A healthy, educated workforce; <bullet> \\\\\\Jobs that provide a livable wage; <bullet> \\\\\\Assess to financial capital and markets; and <bullet> \\\\\\Incentives for entrepreneurial innovation. We need to find ways to assist Indian tribes and individuals obtain these characteristics. We need to <bullet> \\\\\\create incentives; and <bullet> \\\\\\provide technical and financial, and other assistance to tribes; and <bullet> \\\\\\promote economic activities in Indian country for tribal members and public and private investment companies. I know that there are some examples of successful tribal economies out there, and I think we are going to hear about some examples of success today. These successes have been in spite of the economic liabilities faced by tribes and their members, and I applaud the good work that our witnesses are doing. And let me finish by saying that as we look at this issue, we should NOT limit our trust responsibility to tribes. Rather, we need to look at this issue as an opportunity to fulfill our trust responsibility, and helping tribes reach the goals of self- determination and self-sufficiency that Congress and the tribes share. Mr. Chairman, this is an important issue, an overwhelming issue, which makes it difficult to determine how best to tackle it. But it is one that our Committee should be addressing, and I thank you for convening this hearing. [GRAPHIC] [TIFF OMITTED] 27563.001 [GRAPHIC] [TIFF OMITTED] 27563.002 [GRAPHIC] [TIFF OMITTED] 27563.003 [GRAPHIC] [TIFF OMITTED] 27563.004 [GRAPHIC] [TIFF OMITTED] 27563.005 [GRAPHIC] [TIFF OMITTED] 27563.006 [GRAPHIC] [TIFF OMITTED] 27563.007 [GRAPHIC] [TIFF OMITTED] 27563.008 [GRAPHIC] [TIFF OMITTED] 27563.009 [GRAPHIC] [TIFF OMITTED] 27563.010 [GRAPHIC] [TIFF OMITTED] 27563.011 [GRAPHIC] [TIFF OMITTED] 27563.012 [GRAPHIC] [TIFF OMITTED] 27563.013 [GRAPHIC] [TIFF OMITTED] 27563.014 [GRAPHIC] [TIFF OMITTED] 27563.015 [GRAPHIC] [TIFF OMITTED] 27563.016 [GRAPHIC] [TIFF OMITTED] 27563.017 [GRAPHIC] [TIFF OMITTED] 27563.018 [GRAPHIC] [TIFF OMITTED] 27563.019 [GRAPHIC] [TIFF OMITTED] 27563.020 [GRAPHIC] [TIFF OMITTED] 27563.021 [GRAPHIC] [TIFF OMITTED] 27563.022 [GRAPHIC] [TIFF OMITTED] 27563.023 [GRAPHIC] [TIFF OMITTED] 27563.024 [GRAPHIC] [TIFF OMITTED] 27563.025 [GRAPHIC] [TIFF OMITTED] 27563.026 [GRAPHIC] [TIFF OMITTED] 27563.027 [GRAPHIC] [TIFF OMITTED] 27563.028 [GRAPHIC] [TIFF OMITTED] 27563.029 [GRAPHIC] [TIFF OMITTED] 27563.030 [GRAPHIC] [TIFF OMITTED] 27563.031 [GRAPHIC] [TIFF OMITTED] 27563.032 [GRAPHIC] [TIFF OMITTED] 27563.033 [GRAPHIC] [TIFF OMITTED] 27563.034 [GRAPHIC] [TIFF OMITTED] 27563.035 [GRAPHIC] [TIFF OMITTED] 27563.036 [GRAPHIC] [TIFF OMITTED] 27563.037 [GRAPHIC] [TIFF OMITTED] 27563.038 [GRAPHIC] [TIFF OMITTED] 27563.039 [GRAPHIC] [TIFF OMITTED] 27563.040 [GRAPHIC] [TIFF OMITTED] 27563.041 [GRAPHIC] [TIFF OMITTED] 27563.042 [GRAPHIC] [TIFF OMITTED] 27563.043 Prepared Statement of Hon. Tim Johnson, U.S. Senator from South Dakota Thank you Chairman McCain and Vice Chairman Dorgan for holding a hearing on this important issue. I would also like to extend a special welcome to Elsie Meeks of the Oglala Sioux Tribe in South Dakota, we're glad you are here and I look forward to your testimony. The development of reservation economies is of the utmost importance to both the Indian and non-Indian constitutes in my State. I recently proposed a comprehensive economic development initiative called ``The Hometown Prosperity Plan,'' which focuses on the specific needs of both tribal and rural communities. In conjunction with this initiative I recently conduced a tribal listening session on tribal economic development and had an opportunity to hear from several tribal chairmen, presidents, and business leaders. The general consensus among those in attendance was that the greatest impediments to development in Indian country were the lack of access to capital and inadequate infrastructure development. As our witness will probably agree, the Community Development Financial Institutions, Community Development Block Grants, and USDA Rural Development programs have been useful to address these concerns but need continued support from Congress. Also, a bill I have introduced, the Native American Small Business Development Act, would create three grant programs to promote new Native American-owned businesses and establish a permanent Office of Native American Affairs within the U.S. Small Business Administration. I appreciate the bipartisan support this bill has received and will continue in my efforts to pass the legislation. Several of the tribal leaders who spoke at the listening session also brought up the fact that many impediments to economic development can only be properly addressed by tribes themselves. The tribal leaders I spoke with emphasized their responsibilities to build stable governments, educate their youth, and maintain responsible government relationships as sovereign entities. Economic development is not just a tribal responsibility or Federal responsibility, but a partnership. The entire country benefits when reservation economies grow and become self sufficient. In my State, as is common across the country, reservation communities are often considerably worse off financially than non reservation communities of similar sizes. The history of Federal Indian policy is largely to blame for these discrepancies. The obvious difference between comparable reservation and non reservation communities in the Great Plains is that reservation communities lack the private sector development that exists off the reservation. The money that comes into the community rarely turns over before it leaves the reservation. At my listening session President Bordeaux of the Rosebud Sioux tribe, estimated that 85 percent of the $130 million in wages paid annually leaves the reservation without ever turning over because there are simply not enough places to spend money on the reservation. I know many of the witnesses here today have worked hard to address these problems and as Congress proceeds I think consultation, such as at this hearing, is essential. III conceived Federal Policies of the past, some of which still exist, are significantly responsible for the lack of opportunity in Indian country. I feel the best way to avoid the mistakes of the past is through meaningful consultation, and as today's witnesses demonstrate there is a strong determination to put these ideas into action. These are challenging issues to address and they rarely have easy answers so again I would like to thank Chairman McCain and Vice Chairman Dorgan for calling this hearing and I look forward to the testimony. Thank you, [GRAPHIC] [TIFF OMITTED] 27563.044 [GRAPHIC] [TIFF OMITTED] 27563.045 [GRAPHIC] [TIFF OMITTED] 27563.046 [GRAPHIC] [TIFF OMITTED] 27563.047 [GRAPHIC] [TIFF OMITTED] 27563.048 [GRAPHIC] [TIFF OMITTED] 27563.049 [GRAPHIC] [TIFF OMITTED] 27563.050 [GRAPHIC] [TIFF OMITTED] 27563.051 [GRAPHIC] [TIFF OMITTED] 27563.052 [GRAPHIC] [TIFF OMITTED] 27563.053 [GRAPHIC] [TIFF OMITTED] 27563.054 [GRAPHIC] [TIFF OMITTED] 27563.055 [GRAPHIC] [TIFF OMITTED] 27563.056 [GRAPHIC] [TIFF OMITTED] 27563.057 [GRAPHIC] [TIFF OMITTED] 27563.058 [GRAPHIC] [TIFF OMITTED] 27563.059 [GRAPHIC] [TIFF OMITTED] 27563.060 [GRAPHIC] [TIFF OMITTED] 27563.061 [GRAPHIC] [TIFF OMITTED] 27563.062 [GRAPHIC] [TIFF OMITTED] 27563.063 [GRAPHIC] [TIFF OMITTED] 27563.064 [GRAPHIC] [TIFF OMITTED] 27563.065 [GRAPHIC] [TIFF OMITTED] 27563.066 [GRAPHIC] [TIFF OMITTED] 27563.067 [GRAPHIC] [TIFF OMITTED] 27563.068 [GRAPHIC] [TIFF OMITTED] 27563.069 [GRAPHIC] [TIFF OMITTED] 27563.070 [GRAPHIC] [TIFF OMITTED] 27563.071 [GRAPHIC] [TIFF OMITTED] 27563.072 [GRAPHIC] [TIFF OMITTED] 27563.073 [GRAPHIC] [TIFF OMITTED] 27563.074 [GRAPHIC] [TIFF OMITTED] 27563.075 [GRAPHIC] [TIFF OMITTED] 27563.076 [GRAPHIC] [TIFF OMITTED] 27563.077 [GRAPHIC] [TIFF OMITTED] 27563.078 [GRAPHIC] [TIFF OMITTED] 27563.079 [GRAPHIC] [TIFF OMITTED] 27563.080 [GRAPHIC] [TIFF OMITTED] 27563.081 [GRAPHIC] [TIFF OMITTED] 27563.082 [GRAPHIC] [TIFF OMITTED] 27563.083 Prepared Statement of Lance Morgan, CEO of Ho-Chunk, Inc. Over the last 200 years the United States has developed arguably the world's best financial, legal and economic development system. But those battle tested economic and financial systems don't work on the reservation. It isn't that tribes and Native Americans aren't capable of economic success. Tribes had a complex economic and trading system based on mutual self-interest for thousands of years. Like all people we want to make sure that our families have the best available opportunities. But participating in the American economic system remains a far-fetched dream for tribal governments and tribal members because our hands have been tied behind our collective backs. The Trust Land Economic System I want to discuss briefly the economic system we are forced to function in. The consistent and long-term poverty of tribes has its roots in Federal policy. If I had to pick one reason we are poor, I would chose Federal trust land. When the Government created trust land it basically guaranteed our dependence on it for basic services and put a stranglehold on tribal entrepreneurial and economic development. Trust Land can't be taxed by anyone including tribal governments themselves. This prevents tribes from using local property tax dollars and tax-exempt bonds to implement basic Government services. Other attempts at developing an alternative tax base are consistently attacked by overaggressive State governments and encouraged by the U.S. Supreme Court rulings. This lack of a tribal tax base results in tribes being dependent upon the Federal Government for education, health, roads, and police protection. Trust land is also inalienable and therefore, can't be used as collateral for a loan. This effectively killed modern farming on my reservation. Tribal members simply couldn't go to the bank in the spring and get a loan to plant our crop. This forced our members to lease their land to non-Indian farmers and condemned our landholders to the bottom of the value added chain. In most years, the farmers receive more in Federal subsidies than we do in lease income. Trust land also killed home ownership in Indian country. Owning a home has always been a path to create wealth in the United States. But you cannot get a normal mortgage on trust land. We have become life long renters. As a result, we never developed any equity in our homes. This lack of home ownership means inheriting meaningful wealth doesn't even enter our minds. No capital, no collateral, no intergenerational wealth transfer and no experience means owning your own business remains only a dream to most Native Americans. The Federal Government has created this ``Trust Land Economic System'', which is an astounding failure. To make up for it the Federal Government creates small-scale band-aid lending and homeownership programs, which in essence are designed to try and recreate the American economic system on reservations. These programs are well intentioned but have almost no chance of addressing the underlying issue, which is that we don't control our own fate because our largest asset, our land and resources, is controlled by someone else--the Federal Government. Stereotype Economic Development Because meaningful Trust Land reform remains a controversial issue, we have to function in the Trust Land Economic System for now. Without a tax base and almost no hope of being allowed to develop one, we are told by the Federal Government to develop businesses, and to use the profits in lieu of taxes to provide for ourselves. So what do tribes do? We exploit what we can. We historically have gone into low capital businesses that take advantage of all we have-- tribal jurisdiction. Tribes have stereotype businesses that include things like gas, tobacco and now gaming. These aren't genetically hard wired into tribal DNA. These are businesses that allow us to create some type of advantage using our tribal jurisdiction. The problem is that these businesses are controversial. Their existence is not viewed as part of a governmental development strategy, but as an unfair advantage given to a racial group. A cross border tax variance in price on gas or tobacco between States is acceptable and common, but if a tribe tries to create an advantage for itself it is called an unequal playing field. This type of attack is bitterly ironic when you consider that the entire economic system on reservations has clearly been slanted against tribes. Now we have gaming, which has been the most successful use of tribal jurisdiction yet for economic development. But it too is under attack now. The tribes have never in our history of dealings with the United States been able to maintain anything of significant value. There is always a logical rationale, but in the end it is the same result and tribes are left wondering what happened? Because of the obvious threats to non-Indian interests, nobody believes that these jurisdiction-based businesses are the final answer. They are simply the first step. Tribes have to move up the economic ladder to the second stage of development. By taking the income from these controversial businesses and investing it into other types of businesses we will have a chance to create a permanent and self-sustaining economy. SBA 8(a) Program and Diversification One of the primary ways that tribes diversity their economy is the SBA 8(a) program, which allows tribes to break out of a cycle of economic dependence and move up the ladder of economic activity. The company I run is fairly sophisticated, but it took us 4 years of hard work to figure out how to best utilize the SBA 8(a) program. We are currently doing projects for the Federal Government all over the United States and in three countries. In just a few years, we have been able to transform ourselves from a company dependent upon cheap cigarette and gasoline sales to one that is performing vital tasks for the Federal Government. Without the SBA 8(a) program we would be stuck in the Trust Land Economic System and figuring out ways to get more gamblers and smokers to come to our reservation. This program has been hyped by the Federal Government for as long as I have been an Indian professional. It is astounding to me and beyond common sense that its success is being attacked. The SBA 8(a) program should be trumpeted as a clear sign that tribes are evolving their governmental, legal and corporate systems to participate at a higher level in the economic system. In closing, our economic problems are not our own creation. We are doing what we can in an incredibly difficult development environment and are desperately trying to improve the lives of our members. You, as our leaders and controllers of our assets, have the ability to help or hurt us. I respectfully request you help us by allowing us to take control of our destiny and leaving in place meaningful incentive programs that help us help ourselves. Thank-You. [GRAPHIC] [TIFF OMITTED] 27563.084 [GRAPHIC] [TIFF OMITTED] 27563.085 [GRAPHIC] [TIFF OMITTED] 27563.086 [GRAPHIC] [TIFF OMITTED] 27563.087 [GRAPHIC] [TIFF OMITTED] 27563.088 [GRAPHIC] [TIFF OMITTED] 27563.089 Prepared Statement of the Native American Contractors Association The Native American Contractors Association [NACA] appreciates the opportunity to submit testimony for the record on the U.S. Senate Committee on Indian Affairs Oversight Hearing on Tribal Economic Development. The Native American Contractors Association was formed to increase the awareness of the benefits of using Indian tribes, Alaska Native Corporations and Native Hawaiian Organizations [NHO] to provide goods and services to the Federal Government. The mission of NACA is to enhance self-determination through preservation of government contracting participation based on the government-to-government relationship between Native Americans and the Federal Government. The Native American Contractors Association [NACA] is working to enhance the economic self-sufficiency of America's indigenous people. We are working to create a brighter future for Indian tribes and Alaska Natives and Native Hawaiian organizations whose members are among the poorest and most under-employed in America. NACA strives to create opportunities for Native Americans to become economically self- sufficient by enabling them to compete more effectively in the marketplace for government contracts. Unlike other American small businesses, for whom profits generally go to one individual or one family, the profits from Native American corporations owned by tribes and Alaska Native Corporations [ANC] are shared by hundreds--and sometimes even thousands--of tribal members. The profits earned by Native Americans and Alaska Native Corporations provide dividends, job training programs, scholarships, healthcare clinics, social service programs, and cultural programs for their communities. Contracting profits are an essential source of revenue to support vibrant, healthy Native communities in some of the poorest regions where unemployment and poverty rates are disproportionately high--often staggering. To help overcome barriers and impediments to Native American economic development, Congress forged one of its most successful Federal initiatives for Indian tribes, Alaska Native Corporations and Native Hawaiian Organizations [Native Americans] in making them eligible to participate in the Small Business Act's Section 8(a) program. This business development program is intended to help small businesses be successful for the future. The Native American contracting provisions that Congress enacted recognize the unique status of Indian tribes, Alaska Native Corporations and Native Hawaiian Organizations and promote government to government commerce. The Federal Government has a fiduciary duty to promote Native American economic development and self-sufficiency. It took almost 20 years, for Native American contractors to show progress in participating in the Federal marketplace and they are just now starting to achieve a level of success in the 8(a) program. With the Federal Government buying over $300 billion in goods and services annually, and Congress imposing a statutory goal of awarding 23 percent of all Federal contract dollars to small businesses, Native-owned businesses are working harder than ever to match their business capabilities with Federal contracting opportunities. The recent GAO report, Contract Management: Increased Use of Alaska Native Corporations' Special 8(a) Provisions Calls for Tailored Oversight (GAO-06-399) shows the success of the Federal policy of promoting Native American government-to-government participation in the Federal marketplace. The 8(a) program has helped tribal communities diversify their economies and provide jobs, education, and services to a group of Americans historically far less able to access the American dream. The 8(a) program has been particularly helpful to those tribes and Alaska Native Corporations that are located far away from major markets or industrial centers because it provides access to Federal markets nationwide. The ability to participate in Government contracting helps tribes and Alaska Native Corporations develop strong Native economies by generating profits and diversifying native revenue bases rather than focusing on employment. Fostering the development of successful small business contractors advances the Government's interests by broadening and diversifying its industrial base of service providers and suppliers. More competition can result by combating the consolidation of the Government contracting industry into a few dominant large businesses. By providing different contracting provisions to qualified Native Entities, Congress increased the likelihood of sustaining business opportunities, ownership, and revenues for Native Americans. These provisions are fulfilling the Federal Government's special legal obligations. to Native Americans. As discussions regarding the reauthorization of the Small Business Act and implementation of the recommendations in the above-mentioned GAO report begin, we ask for your support to maintain and preserve these Native 8(a) provisions. 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