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Pawlenty regret: Falling short on Indian/state casino

Failure to gain support for a state-American Indian operated casino ranks among Gov. Tim Pawlenty's greatest disappointments.

The two-term Republican governor on Tuesday announced he will not seek re-election in 2010, but did not give plans on what he'll do after that. A contender for vice president last year, he is mentioned as a potential 2012 presidential candidate.

"A lot of things I'd do over," Pawlenty said Tuesday during a State Capitol news conference that included outstate reporters via telephone when asked about his greatest disappointments.

"I could make a long list, but to give you a few just by representative example," he said, and then cited the 2003 battle to solve a $4.5 billion budget hole. Standing steadfast by his "no new taxes" pledge, Pawlenty pushed hard for budget cuts and raising fees but no income tax hikes.

It was a deficit he inherited after winning election in 2002 in a three-way race that saw him win but not with a majority of votes.

"We ran the table pretty hard on the Democrats," he said of budget negotiations. "I think there's a lot of bitterness because of that. I think if I had to do that over again, I think I would have allowed a little more room for mutual victory."

He would "let up on the accelerator a little bit" given the chance again, he said.

Another example, Pawlenty said, "is the way we handled the gaming issue. When I teed that up and proposed that a few years ago, we just kind of dropped it on the native American community in Minnesota who have current gaming interests."

The governor proposed a jointly run state-American Indian casino in 2004 as a state budget revenue raiser, hoping to forge a partnership with the Red Lake, White Earth and Leech Lake bands of Ojibwe.

He visited with tribal leaders on all three reservations, and a bill calling for a Red Lake-White Earth-state partnership received Senate and House hearings. The proposal was seen to raise an estimated $90 million a year for the state and $65 million a year to each tribe.

Leech Lake first embraced the idea, but later dropped out of the plan.

Long a foe of gambling, Pawlenty saw the partnership as a way for the state to break into the lucrative casino field and as leverage in negotiations at that time with the wealthier tribes that ran casino operations.

Since gaming compacts signed between the state and Minnesota's tribes were in perpetuity with no opportunity for renegotiation, Pawlenty saw a state partnership with the poorest tribes as leverage in his push to have the cash-loaded tribally run casinos donate some of their profits to the state.

"I don't think we spent the right amount of time working with them and communicating with them about our plan and trying to find some potential common ground," Pawlenty said Tuesday.

"The issue of appeal there was that you had large numbers, the majority of native Americans in Minnesota in the northern tribes, who didn't benefit much or at all from gaming," he said. "There was this (mis)distribution of gaming resources relative to native Americans in terms of their demographics.

"Some adjustment, I thought, was appropriate," Pawlenty said.

"I think we handled that poorly, because we just came out and dropped it, and it didn't go well for me," he said.

At that time, each member of the small Shakopee tribe which runs Mystic Lake southwest of the Twin Cities received millions of dollars in casino profits, while northern tribes got only 5 percent of the state's gaming revenue. White Earth and Red Lake enrollees make up about 65 percent of the state's American Indian population.

The proposal, which didn't win legislative approval, would have put the casino with 4,000 video slot machines within 40 miles of the Twin Cities and be run by the two tribes, with the state getting a cut of the profits.

Pawlenty also wasn't successful in gaining donations from the wealthier tribes, with them successfully arguing that they already pay in payroll taxes, sales tax, alcohol and cigarette taxes and fees for government services.

A 2000 economic impact update by Marquette Advisors found that tribal gaming in Minnesota generated more than $40.2 million in Social Security and Medicare revenues, $27.8 million in federal income taxes, $10.2 million in state income taxes, and $2.6 million in federal and state unemployment compensation taxes. Tribes paid nearly $16 million in additional taxes and payments in lieu of taxes to state and local governments, according to the Minnesota Indian Gaming Association.