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Published in Economic Development
The Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, or Gun Lake Tribe, took swift action early on in the COVID-19 pandemic to shut down its casino and parts of its government operations. “We want to lead with compassion and show that we’re supporting everyone and their safety and their well being,” said Bob Peters, chairman of the Gun Lake Tribe, pictured at the tribe’s government complex in Bradley, south of Grand Rapids. The Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, or Gun Lake Tribe, took swift action early on in the COVID-19 pandemic to shut down its casino and parts of its government operations. “We want to lead with compassion and show that we’re supporting everyone and their safety and their well being,” said Bob Peters, chairman of the Gun Lake Tribe, pictured at the tribe’s government complex in Bradley, south of Grand Rapids. PHOTO: JEFF HAGE, GREEN FROG PHOTO

Pandemic deals major financial, cultural blow to Michigan tribes

BY Sunday, July 19, 2020 05:24pm

More than four months into the COVID-19 pandemic, Michigan’s 12 federally recognized tribes have fared better from a health care perspective than many other Native American tribes nationally.

While the virus has wreaked havoc on American Indian communities in the southwestern states — as of this writing, for example, Navajo Nation has reported more than 8,400 confirmed cases and 400 deaths from COVID-19 — Native people made up 0.99 percent of all reported cases in Michigan, according to the state Disease Surveillance System. 

Although that’s roughly double the percentage of Native Americans as a portion of the state’s population, tribal leaders from around West Michigan told MiBiz they can point to only a handful of cases involving their tribal citizens being affected by the highly communicable virus. 

Instead, they say the most devastating effects of the pandemic for their tribes have been the economic and cultural toll they’ve suffered as a result.

It’s undeniable that Michigan-based tribes’ decisions to close their casinos for six to eight weeks or more starting in March have cost them upwards of $200 million, according to MiBiz estimates. That’s money the 12 sovereign tribal nations pour back into their communities for services ranging from health care and education to public safety and housing — funding they will not be able to make up. 

“The financial hit that we took is unrecoverable,” said Matthew Wesaw, tribal council chairman of the Dowagiac-based Pokagon Band of Potawatomi, which operates three Four Winds Casinos in Southwest Michigan and one in South Bend, Ind. “Closing down the casinos for three and a half months, that’s revenue we’ll never get back. … That put a real big hurt on us financially.” 

While Michigan-based tribes shared in $8 billion from the CARES Act allocated to tribal governments nationwide, the funding they received is not near enough to fill the revenue gap left by the casino closures — even if they could use the monies for that purpose, which they can’t. 

What’s worse is that for now, many tribes have stocked the money away in their bank accounts without a clear plan for how they will be able to spend it, given the various restrictions on the use of the CARES Act funds. 

“That money is sitting there until we know how we can spend it the right way,” said Bob Peters, chairman of the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians, or Gun Lake Tribe. “The last thing we’d want is to be audited and have to pay it back.” 

Peters declined to disclose how much the Gun Lake Tribe received from the federal government, calling it “a small chunk.”

“It’s nothing compared to what we lost,” Peters said, “but anything is better than nothing.” 

Unexpected actions

Unlike federal, state and local governments, tribal nations generally lack the ability to create a tax base to fund their operations because reservation lands typically are held in trust by the federal government. That leaves federally recognized tribes throughout Michigan and across the country with limited resources to run their governments, which are usually funded by two main sources: casino gaming revenues and funding from various federal departments. 

Nationally, revenues at tribal casinos are estimated to hit $24 billion this year, $10 billion less than in 2019,  according to executives at the National Indian Gaming Association who spoke during a recent podcast on the effects of the pandemic.

While most Michigan tribes have invested in diversifying their revenues away from gaming in recent years, casinos remain the major economic driver in Indian Country. According to the American Gaming Association, the state’s 24 tribally owned casinos generated $1.42 billion in gross revenue in 2016, the most recent year for which data are available. 

Even so, the Gun Lake Tribe’s voluntary decision to close its facilities — tribes are sovereign nations that do not fall under state law or the various executive orders — “was the easiest tough decision we ever made,” Peters said in reference to the “proactive” step his tribal council took to close Gun Lake Casino on March 16, one of the first in the country to do so. 

“We knew we had to do it, we knew that we were going to lose millions and millions, but we knew that we had to keep the community safe,” he said. “It’s cost us millions in negative impact over the tribal economy as a whole, but it was the health and safety of our employees that comes before profit. It was our employees and also the patrons and the general community, too.”

Besides the financial hit, the closure also brought about its own set of challenges, all during a time of acute uncertainty and rapidly changing protocols.

“For one thing, we don’t even have locks on the casino doors,” Peters said, adding that the move also required notifying various agencies, including the National Indian Gaming Commission, as well as “a ton of logistics.”

Wesaw at the Pokagon Band of Potawatomi, who also serves as CEO of the Pokagon Gaming Authority that runs the tribally-owned Four Winds Casinos, echoed Peters’ sentiments about the casino closures. 

“There’s no planning for something like this,” Wesaw said. “When we opened our doors 13 years ago, we would have never in 100 years expected to close them. That’s just not a plan that we had.”

For the Pokagon Band, the move to close the casino was “a tough economic decision” that the tribal council framed as necessary to protect the health and safety of tribal citizens, many of whom suffer from conditions like diabetes and heart disease that put them at risk if they were to contract the new coronavirus. 

“As a Native American community, we’re high risk basically just because we’re Native Americans,” he said. 

With the spigot of casino revenue immediately shut off, the tribe prioritized its workforce, keeping on the mission critical employees in health care, law enforcement, social services and housing, and allowing other essential services workers to work from home. Some 2,500 casino and tribal government employees whose work did not directly affect essential service delivery were furloughed, which Wesaw described as “the biggest hurt” caused by the pandemic. 

“Right now, I feel very badly because we’ve got people who want to come back to work and we just can’t bring them back because we don’t have the revenue,” he said. 

In a May interview with the New York Times, Bay Mills Indian Community Chairman Bryan Newland characterized the Upper Peninsula tribe’s predicament as “life and death” during its casino closure, noting that about two-thirds of tribal employees had been laid off. 

“We’re just going to write off 2020. There’s no sense in trying to work under the delusion that we’ll be able to claw back to normal life this year,” Newland said in the report.

The Brimley-based Bay Mills Indian Community was among the tribes and tribal entities to receive funding via the U.S. Small Business Administration’s Paycheck Protection Program. The tribe received a loan valued at $2 million to $5 million, according to public records. 

Other tribal recipients included the Sault Ste. Marie Tribe of Chippewa Indians’ Vegas Kewadin Casino ($5 million to $10 million), the Lac Vieux Desert Band of Lake Superior Chippewa Indians in Watersmeet ($1 million to $2 million) and Keweenaw Bay Ojibwa Community College in Baraga ($150,000-$350,000). 

Tough decisions ahead

What lasting effects tribal citizens may feel from the still ongoing pandemic remains largely an open question at this point. 

Like many in the West Michigan business community, the local tribes approach their operations from a fiscally conservative perspective, according to sources familiar with governments in Indian Country. As such, the tribes had rainy day funds and reserves they could use during the crisis to fund operations and other essential services for members, including health care. 

“We’ve all been conservative with our money, never overspent, and that set us up to take care of something like this,” said Chairman Peters at the Gun Lake Tribe. “I don’t want to say we were ready for this, but we were financially able to weather this storm without a huge, huge impact to our community and all the other stuff that we provide.” 

But given that their economic engines were idled for more than two months, tribal leaders are bracing for a sheer falloff in their budgets for the coming fiscal year.

Frank Cloutier, director of public relations for the government of the Saginaw Chippewa Indian Tribe and a former chief and tribal council member, said the budgetary dilemmas are only starting for tribes across the state, but it’s premature to speculate how that will shake out for tribal operations. The Saginaw Chippewa Tribe operates the Soaring Eagle Casino in Mount Pleasant, the state’s largest tribal casino, and the Saganing Eagles Landing Casino in Standish. 

“Our budgets are due by the end of the month for each government department, as well as the gaming department. Looking at their new projections, that’s going to really write the story of what the true impact is going to be moving forward,” said Cloutier, who has been active in tribal government and Native American advocacy for 19 years. 

“We were fortunate enough to have the reserves to carry us through, but we always rely on the previous year’s income to set our budgets for the upcoming year,” he said. “That direct loss is absolutely going to be reflected in those budgets that are due at the end of the month for review. We’re drawing that picture right now.

“There’s some very hard decisions coming for leadership and for these department directors.”

One source of money that’s off limits for the tribes to use in offsetting their casino revenue shortfalls is the CARES Act funding they received from the U.S. federal government. 

Like state governments, tribes that received Coronavirus Relief Funds included in the CARES Act can only spend the money to cover unbudgeted expenses incurred because of the pandemic during the period from March 1 to Dec. 31 of this year. 

“Revenue replacement is not a permissible use of funds,” said Saba Bazzazieh, a Washington, D.C.-based partner at Rosette LLP, a majority Native American-owned law firm with an office in Grand Rapids. 

In working with tribal clients across the country, Bazzazieh has heard many concerns about the strings attached to the CARES Act funding and how that limits the ability of tribal governments to put it to use for their most pressing issues. 

“Generally, there have been concerns that the restrictions hinder the flexibility of some governments to utilize their discretion in how the funds could best meet the needs of their respective community,” she said. “Recognizing that the needs in the community are immediate and significant, (tribal leaders) obviously want to conform to the guidance of the federal government and those requirements, but also want to meet the immediate needs of the community.” 

Seeking relief

Across the board, tribal government sources told MiBiz they’re appreciative of the CARES Act funding, but feel hamstrung by the restrictions imposed around it. 

“Based on the restrictions that they have on how that money can be spent, I doubt very seriously that we’re going to be able to utilize it all, which is unfortunate because we’ve got a lot of areas where we could use it but we can’t,” Pokagon Band’s Wesaw said. 

The Sault Ste. Marie Tribe of Chippewa Indians in the Upper Peninsula, Michigan’s largest tribe with about 40,000 enrolled members, received $37.9 million from the CARES Act’s Coronavirus Relief Fund, which is believed to be the largest award among the 12 federally recognized tribes in Michigan. 

In early July, the Sault Tribe’s board of directors established a $3.5 million COVID-19 Direct Tribal Member Assistance Program to offer emergency financial help for expenses such as medical, housing, food and transportation related to the pandemic. Only one grant award was available per household. 

“Our collective goal [is] to provide relief from the pandemic in accordance with our tribal strategic plan,” Tribal Chairperson Aaron Payment said in a statement, noting the CARES Act also prohibited tribes from using the money for per capita distributions to citizens. “Our priority is to meet the needs of our neediest and most impacted first.” 

Although the federal government has updated its guidance around the CARES Act funding several times, attorney Bazzazieh doubts tribes will ever gain the flexibility to use the allocations for revenue replacement, which she said “appears to be off the table.” 

Any revenue replacement funding for tribes is likely to come in future rounds of stimulus funding, she added, noting that the House Democrats’ Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act “sets aside an additional $20 billion for tribal governments, and it specifically allows lost, delayed or decreased revenues to be an eligible use of funds.”

The $3 trillion legislation passed the U.S. House largely along partisan lines, but has yet to be taken up by the Senate, where it faces an “unknown and unclear” fate, Bazzaziah said. 

“(An additional stimulus) is what many tribal governments … are looking for because there is a very significant void right now,” she said. “Given the spike in recent cases, and some tribal casinos being forced to close again after a short reopening, it’s just really not clear when the revenue will be coming in again to the tribal governments. There’s still going to be significant unmet need.”

Given the restrictions on the CARES Act funding, Cloutier at the Saginaw Chippewa Tribe said that his community is doing what it can with its available resources to ensure the health and safety of members. That includes “multi-million dollar implications” such as providing health coverage to unemployed citizens as well as investing in various technologies to ensure that services continue for members in an era of social distancing.

“As with everything in the federal government, we’re not going to jeopardize the quality of life for our membership and wait for the federal government to do something. We’re going to make those decisions ourselves and move forward as much as we can,” he said. 

Cultural disconnect

At Gun Lake Tribe, the council continues to go through a planning process to determine how the pandemic could affect operations in the future, including a possible second wave and casino closure. 

“We have to monitor wants versus needs and that’s across the board, while still providing adequate programs for our citizens,” Peters said. “We’ve got our strategic plans, so we’re going through those now and seeing what is still feasible, what needs to move further in the future, what can wait a little bit and what do we need now.”

Aside from the direct hit to the tribes’ coffers, leaders told MiBiz the pandemic also has exacted a heavy toll on tribal culture, which thrives on gatherings to preserve the social fabric of their communities and individual traditions. 

For example, the pandemic and need to maintain social distance has led to the statewide cancellation of virtually all powwows, events that celebrate Indigenous culture with dancing, singing and other ancestral traditions. 

“You’re grieving. It’s almost like a loss because you can’t be with these people that you’ve always been able to share with and experience things with, and it’s just the unknown of when is this going to end, when are we going to be able to do this again,” Peters said.

Cloutier described the loss of cultural opportunities as “a major concern,” noting that it’s “causing a real, huge disconnect between our membership and our culture, and of course, it’s for their own good.” However, he’s been encouraged to see how members have leveraged technology to stay in touch virtually as much as possible. 

For the Pokagon Band, the lack of social gatherings and ceremonies has been “a very difficult issue” and “emotionally devastating” for members, Wesaw said. Even so, he’s been “pleasantly surprised” by how well tribal citizens have adapted to the extreme volatility of the current situation. 

“To Monday morning quarterback this, which we haven’t done yet, I don’t know that there’s a lot of things that we would have done differently,” Wesaw said. “We shut down fairly quickly, and quite honestly, I don’t know that we could have shut down any quicker. Obviously, the personal protection equipment would have been nice to have, but who would have factored that? Testing equipment might have been nice to have, but who would have thought that this was going to happen? But now we do have all of that stuff in preparation for a second wave, if it ends up happening. We’ll be better prepared.”

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