ARNOLD HITS THE JACKPOT GOVERNOR, TRIBES REACH CASINO DEAL.

Byline: David M. Drucker Sacramento Bureau

SACRAMENTO - Gov. Arnold Schwarzenegger and several Indian tribes have reached a tentative agreement on a deal that could bring the state an extra $250 million annually from casino gambling and provide $1 billion immediately to help ease the budget crunch, the Daily News has learned.

Sources say the tribes that agree to this compact would be granted the right to install an unlimited number of slot machines in their casinos instead of the current 2,000 limit.

Four tribes have come to tentative terms with the governor but an announcement might be delayed in expectation that others can be brought aboard, according to one insider.

Another tribe, the Lytton Band of Pomo Indians, which does not now operate a casino, is in the final stages of negotiations to build one on land in the urban San Francisco Bay Area. This deal could eventually generate up to $75 million annually for the state on top of the $250 million.

The four tribes closest to a deal would borrow $1 billion now against future gaming revenue and provide that money to the state. Schwarzenegger would use it to ease the severity of transportation cuts that have to be made this year.

``I think there's good faith and good will on all sides on trying to reach common objectives,'' said Sacramento attorney Howard Dickstein, who represents the Pala Band of Mission Indians near San Diego, and the Rumsey Band of Wintun Indians and the United Auburn Indian Community, both near Sacramento.

Those tribes and the Viejas Band of Kumeyaay Indians near San Diego could conclude the renegotiations of their existing compacts with the state by Friday.

Sources said the pending agreements will be written so that the state gets a larger share of take as the casinos add more slots. The goal is to make sure there is truly a market for expansion, after critics predicted that Schwarzenegger's willingness to drop slot-machine caps in return for revenue would result in an unbridled expansion of gambling in California.

Tribes with existing compacts, like Viejas and the three represented by Dickstein, will have 10 years to 15 years added on to the 20-year agreements that were signed in 1999 by Gov. Gray Davis.

Schwarzenegger also appears amenable to the key tribal concern of allowing tribes to remain California's exclusive destination for Las Vegas-style gambling.

``It's clear to me the governor is committed to accomplishing everything he's set out to do, and I think we're going to get it done,'' said attorney Tony Cohen, who represents Lytton.

The Schwarzenegger administration declined to comment on the status or specifics of any of the negotiations.

There are 109 federally recognized Indian tribes in California, and many of them - including the 52 that operate some type of gambling facility - have been trying to figure out how to respond to Schwarzenegger's campaign promise to force them to ``pay their fair share'' of revenues to the state.

Tribes with casinos clear roughly $5 billion a year, according to unofficial estimates, and pay the state roughly $140 million a year. The tribes pay into two funds, one for poor tribes without gaming and the other for limited programs such as regulation of gambling.

Schwarzenegger's political clout and ability to sway voters apparently loomed large in getting the tribes to renegotiate. The governor has said the money will help mitigate the costs to the state and local governments created by casino patronage and ensure that building on reservations adheres to environmental regulations.

``Schwarzenegger's political success has definitely influenced some of the tribes,'' one gaming insider said. ``All he has to do is say 'fair share' and the Indians lose the public relations battle.''

Still, not all tribes are negotiating, and there appear to be differing opinions on the best way to deal with Schwarzenegger.

Two tribes, the Agua Caliente Band of Cahuilla Indians near Palm Springs and the Morongo Band of Mission Indians near Banning, were at one time party to the negotiations with the administration.

But both quit the discussions after becoming dissatisfied with the emerging terms, and are pursuing their own ballot measure. If it qualifies for the November ballot and is passed by voters, all tribes would have virtual autonomy over their gambling operations as long as they pay the corporate tax rate of 8.84 percent on their earnings.

The San Manuel Band of Mission Indians near San Bernardino recently broke off compact negotiations with Schwarzenegger over objections to how much money he wanted, tribal Chairman Deron Marquez said. Still, San Manuel has not decided whether to support the Agua Caliente-Morongo initiative, and Marquez said the possibility of restarting negotiations with the governor remains.

``This goes a lot deeper than simple dollars,'' Marquez said.

``When you start injecting sovereignty issues, the state wants to intrude a lot farther than we find acceptable.''

David M. Drucker, [phone]

david.drucker(at)dailybulletin.com