Budget might have $72M hole if state loses HoChunk case

By Scott Bauer
Madison, Wisconsin (AP) 11-07

In a move described as questionable and a potential time bomb, the state’s budget balances on a gamble it will win a court case against the Ho-Chunk Nation.

If the state loses, a $72 million hole could be blown into Wisconsin’s budget.

Passed during late October, the budget assumes that a court will order the Ho-Chunk to make payments to the state that the tribe says it does not owe. The state Department of Administration estimates the tribe will owe about $72 million in fees under its gambling compact by June 30, 2009. But a lawsuit over the money is pending in federal court and there are no guarantees that the state will win, get as much as it is seeking, or that payment will be received during the current budget cycle.

“I would consider this a potential time bomb inside the budget,” said Sen. Robert Cowles, R-Green Bay. He questioned assistant Department of Administration Secretary Dan Schoof about the case during a hearing Wednesday related to a state audit of casino payments.

“I don’t think that it was a good idea to assume this would come in,” Cowles said.

The move was also being questioned outside the Legislature.

Expecting the money is one in a series of questionable accounting moves made in the latest budget to make it balance on paper but not in reality, said Todd Berry, director of the nonpartisan Wisconsin Taxpayers Alliance. Others include a $200 million fund transfer that’s already being challenged in court and assumptions on how much in cigarette taxes will be collected, Berry said.

But an aide to a Republican lawmaker who helped craft the budget defended the move and said the Ho-Chunk payments are owed to the state and had to be accounted for.

If for some reason the money doesn’t come in as planned, then the Legislature will have to address the shortfall just as it does whenever tax revenues fall short of projections, said Eric Schutt, an aide to Rep. Kitty Rhoades, R-Hudson.

The Ho-Chunk money is part of nearly $200 million the state is counting on getting in payments from Indian tribes that operate casinos in Wisconsin over the next two years. Of that, about $57 million goes toward specific programs, including health projects for Indians in Wisconsin, tourism marketing, and snowmobile safety training.

What’s left over, about $143 million, goes into the state’s general fund. Without the money from the tribe, lawmakers would be forced to fill a $72 million hole.

Schoof told the legislative audit committee that the Doyle administration included the payments in the budget as anticipated revenue because it was assumed the Ho-Chunk will pay them.

“I hope they’re right,” Cowles said.

The Ho-Chunk held off on payments to the state after a 2004 state Supreme Court ruling that said Gov. Jim Doyle exceeded his authority by signing an agreement with the Potawatomi tribe that was perpetual, waived the state’s immunity from lawsuits and allowed new games.

In the wake of that ruling, the Ho-Chunk said they were withholding payments until they made a new deal with the state. The tribe argued that because of the court ruling, its original compact with the state was no longer valid and the payments did not have to be made.

“Our position is we owe them nothing,” said Ho-Chunk attorney Les Marston.

The state sued in 2005 and the case is now pending before the 7th Circuit U.S. Court of Appeals. Oral arguments were held last week and attorneys on both sides said they expect a ruling in the next three or four months.

The Ho-Chunk operates casinos in the Wisconsin Dells, Nekoosa and Black River Falls.