TRIBAL UTILITY TAX EXEMPTION WORKING GROUP PROGRESS REPORT For - PDF document

TRIBAL UTILITY TAX EXEMPTION WORKING GROUP PROGRESS REPORT For presentation to the Legislative Indian Affairs Committee November 7, 2008 I. Introduction II. Process III. Product—Handbook IV. Future Directions I. Introduction A. Brief History As a result of the workshop conducted by the Public Regulation Commission (“PRC”) at the State Capitol on July 11, 2008, an informal working group convened to develop a consensus approach to the issues identified in Case No. 08-00023-UT. The group had its first meeting at the State Library in Santa Fe on August 22, 2008 and selected Mr. Joe Garcia, Chairman of the All Indian Pueblo Council, to be Chairman of the Working Group. Roy E. Stephenson, PRC Utility Division Director and Mark Cessarich, PRC Telecommunications Bureau Economist, were selected as Co-Chairs. Since then, the group has been meeting on a roughly bi-weekly basis, pursuant to a project management approach. Representatives of most of the 19 pueblos and the Navajo Nation have participated in the Working Group meetings, along with representatives of utility and telecommunications service providers. The group identified as its objective the development of a handbook that would serve as a reference for tribal members and authorities, utility service providers, regulators and officials of the Taxation and Revenue Department (“T&RD”). Representatives of T&RD have referred to their Rule, 3.2.4.9. B (2) (a) NMAC, which affords discretion to the Secretary to approve alternative methods for certification of tax exempt status. 11/07/08 Page 1

The Working Group established several subcommittees to address specific components of the project:  Prepare an understandable synopsis of relevant law, statute and rule.  Develop a universal or model form for reporting.  Develop materials for outreach.  Establish a contact list to facilitate communications with tribes and utilities.  Create a matrix cross referencing utility service providers with tribes and pueblos.  Generate a map in support of the matrix.  Establish the conceptual foundation for a database: o To gather in a single, secure location all pertinent customer information necessary to claim the tax exemption. o To provide a mechanism for tribal officials to certify those entities and members who should be exempt from taxation. o To allow individual utility service providers to access only the minimum amount of information necessary for them to identify exempt customers. o To permit utility service providers to rely on the data base process in the event of an audit by TR&D. B. Purpose of this Report This report is submitted on behalf of the Working Group to inform Tribal Governments, entities and members, the PRC, the Legislature, affected industries and interested persons as to the progress of the group to date. Attached to this report are a series of documents, identified by Tab Number , that represent the most recent work products of the group. These documents are intended as discussion drafts, for comment and review. Please be advised that these documents are not definitive and have not been adopted or ratified by any formal body or organization. Some have been posted to the PRC web site under the button: “NATIVE AMERICAN TAX EXEMPTIONS.” As further iterations or refinements are made, the website will be updated accordingly. II. Process A. Adoption of the Project Management Approach At the first meeting of the Working Group, Chairman Garcia made a presentation of the project management methodology, which was accepted by consensus of the group. In fact, because the Group is ad hoc, with no formal powers or jurisdiction, and membership in the group is voluntary, all decisions are made by consensus. The goals are to establish a network of communication, to provide recommendations and to develop specific reference materials, as 11/07/08 Page 2

described more fully below. Each meeting of the Group begins and ends with a prayer offered by the most appropriate tribal leader in attendance. Tab 1a: Scope of Work; Tab 1b: Project Definition B. Accomplishments Although no formal minutes are recorded, the Working Group has documented its discussions, deliberations and decisions through in summary bullet form. Tab 2: TWG Accomplishments C. Subcommittees As the project moved forward, specific areas, issues and concerns were identified, so subcommittees evolved to address them. Each subcommittee had the task of developing one or more components of the projected final product. These subcommittees are:  Forms—with the objective of compiling a single form that could be used by individuals, utilities and tribal governments to identify which customers qualify for tax exemption. Tab 3: Sample Form  Outreach—to explore means for dissemination of information about the tax exemptions and for encouraging greater participation from tribal customers. Tab 4: Outreach  Database—to develop a systems approach for managing the necessary information while protecting privacy concerns. Subcomponents include territory maps, a matrix cross- referencing tribal entities with service providers, as well as descriptions of database operations. Tab 5: Database; Tab 6: Map; Tab 7: Matrix  Legal analysis—to review all pertinent statutory and regulatory applications, and then to present them in a usable format. Tab 8: List of Taxes 11/07/08 Page 3

III. Product—Handbook In addition to the materials set forth above, the prospective Handbook/Guidebook would include background factual and legal history leading up to its creation. There will be an introductory section explaining how the Handbook may best be employed by its various users. One section of the Handbook can be devoted to the different approaches developed by tribal governments to address their unique conditions of population, geography, etc. One such example has already been articulated by three tribes, through their counsel. As an appendix the Handbook would have a contact list for all tribal entities and service providers, as well as relevant governmental entities. The Handbook will be posted to the PRC website. Tab 9: Handbook Excerpt IV. Future Directions The Working Group has provided a very positive example of how people of good will and open minds can work together to tackle the most thorny of situations. When all points of view are represented, results emerge. Because this process is not yet complete, and because personnel and circumstances do change over time, the Working Group has resolved not to dissolve itself, but to continue meeting on a regular basis to share ideas, successes, questions and concerns. There are at least two outstanding issues remaining: A. Database There was general agreement in the group that a database solution would be the most efficient and effective. Such a system, however, requires operation by an independent third party so that the information can be managed properly—utilities can access the data that they need without being in violation of confidentiality or privacy restrictions, and tribal governments may make use of the data for their own purposes without risk of disclosure. Going forward, the questions are: Who should own, operate and oversee the database? What funding is necessary to establish and maintain the database? B. Refunds This has been an area of much interest, as it was in the previous PRC proceeding. The Working Group established the priority of concentrating on the process of identifying the exemptions going forward. Once such a system is in place, then the Group would address the issue of how refunds could be implemented. 11/07/08 Page 4