The Ojibwa Casino in the northwestern Upper Peninsula town of Baraga is just one of many thousands of Michigan businesses shuttered due to the coronavirus pandemic. But at most businesses, lost revenue doesn’t immediately demolish budgets for the local health department, police force and social services system.

The casino and resort funds as much as 60 percent of the Keweenaw Bay Indian Community’s federal budget, said Chris Swartz, the tribe’s president. Swartz said the Ojibwa closure is eating up to $2 million a month in revenue that the 3,600-member tribe would otherwise spend on children’s health, police patrols, senior services, natural resources management and other programs.

“We had to lay off half of our government,” Swartz said. “Unless they’re in grant-funded positions, they’re pretty much off until the casino is back up and running.”

As a result, he said, fewer people are receiving medical care through the tribal clinic. Daily lunches for tribal elders have been canceled. Fewer social workers are available to keep tabs on child welfare. The cuts could linger well after the casino reopens, as the tribe is forced to slash government services to bring budgets back into balance.

As Michigan’s coronavirus shutdown dries up a key revenue stream for Michigan’s 12 federally-recognized Native American tribes, government leaders face a similar conundrum: Open casinos sooner to stop the financial bleed and risk spreading infection on the gaming floor, or stay closed and decide which government programs to sacrifice?

Why tribes do gaming

Unlike state and local governments, Native American tribes generally lack the ability to levy taxes that fund key government services, which means revenue must come from elsewhere.

The U.S. government provides a portion of funding for some tribal government programs as part of a treaty obligation with Native American tribes. In exchange for their lands, the United States agreed to provide tribes with services such as health care, law enforcement and education. But that funding has never been enough and remains inadequate, according to a 2018 report by the U.S. Commission on Civil Rights.

So in the 1970s, some tribes began to make up the difference by opening bingo halls and funneling gambling revenue into government programs. Several states, including Michigan, sued in an attempt to shut down tribal gaming businesses. The disputes culminated in a 1988 U.S. Supreme Court decision that affirmed Native American tribes have the right to establish gaming operations on their land. Today, all of Michigan’s 12 federally-recognized tribes own casinos that help fund their government. Some share a portion of revenue directly with their citizens in much the same way that Alaskans receive oil royalties.

As sovereign nations, tribes are not required to disclose details of their budgets to the non-tribal public. Of the five tribal leaders who spoke to Bridge for this story, all said casino revenue is a significant portion of their government budgets but none offered specific dollar figures. Frank Ettawageshik, executive director of the United Tribes of Michigan, which represents Michigan’s federally recognized tribes, estimated that on average, gaming contributions comprise about half of government budgets for Michigan tribes.

“The casinos provide the revenue that’s making up for woefully inadequate funding from the federal government,” Ettawageshik said.

But tribes’ reliance on gaming revenue can also leave government programs more vulnerable to economic downturns than, say, municipal budgets funded by property taxes.

“In a period of crisis like we’re in right now, state and city government revenue is declining too, but the bottom hasn’t fallen out,” said Miriam Jorgensen, research director for the Harvard Project on American Indian Economic Development and the University of Arizona Native Nations Institute. “Because tribes don’t have a tax base, the bottom falls out immediately when casinos can’t operate.”

Frank Cloutier, tribal spokesman and former chief of the Saginaw Chippewa Indian Tribe in central Michigan, said gaming revenue accounts for three-quarters of the tribe’s budget. With the tribe’s Soaring Eagle Casino & Resort near Mount Pleasant entering its seventh week closed, Cloutier said some government programs could be on the chopping block as the tribe looks to balance its budget with fewer casino receipts.

“Most people hear about tribal gaming and they think slot machines and blackjack tables,” Cloutier said. “I’m talking about education. I’m talking about lunch programs for our youth. I’m talking about elder care, I’m talking about housing infrastructure, tribal court, fire and police.”

Tribal casinos help local communities, too

Tribal governments and the citizens they serve aren’t the only ones reeling from the casino closures.

Under legal agreements with the state of Michigan, casino-owning tribes share 2 percent of their gaming revenue with local non-tribal governments near their casinos. In 2018, those agreements funneled $30.1 million into schools, fire and rescue services and other local government institutions in communities near casinos.

The money is a drop in the bucket for larger communities that receive tribal revenue sharing dollars, such as Battle Creek and Mount Pleasant. But five of Michigan’s 12 tribes are located in isolated, economically limited regions of the Upper Peninsula, where fewer people and lower per-capita income translates into smaller local government budgets. In these communities, casino revenue can be crucial to local budgets.

Money from the Bay Mills Indian Community’s resort and casinos accounts for nearly half of the budget of Bay Mills Township in the eastern Upper Peninsula, said Township Supervisor Roger Graham. It pays for the two-person grounds crew that mows the cemetery and completes odd jobs during the summer. It funds the volunteer fire department. It fixes roads and buys lawn mowers and other equipment.

Graham said he isn’t expecting a check next quarter. He might not be able to hire a grounds crew this year. That’s two more jobs lost in an area where, even before the coronavirus shutdown, there weren’t a wealth of job opportunities. Pre-pandemic unemployment was already near 7 percent.

“It’s going to have a huge impact,” Graham said. “I don’t know what we’re going to do. We’re just trying to scale back anywhere we can.”

Tribes also are among the Upper Peninsula’s biggest employers, said Tom Durkee, business development manager for the Michigan Economic Development Corp.