INDIAN GAMING PROPOSITIONS THREATEN ARNOLD'S AGENDA.

Byline: David M. Drucker Sacramento Bureau

SACRAMENTO - Gov. Arnold Schwarzenegger's governing agenda is on the line this November as three ballot measures could blow a hole in the state budget and weaken him politically if he fails to sway voters.

Propositions 68 and 70 would undermine his policy on Indian gaming - possibly costing Sacramento billions of dollars in annual revenue and overriding environmental, local-government and labor protections that tribes agreed to under casino compacts signed in June.

``In terms of prioritizing his time, clearly the defeat of Propositions 68 and 70 are of paramount interest,'' said Schwarzenegger's political adviser, Marty Wilson.

Five California Indian tribes have signed compacts with the state, adding a projected $300 million in annual revenue to the state's general fund and $1 billion in one-time revenue for transportation projects. The administration is counting on more revenue for state programs from the compacts, and negotiations are continuing with about a dozen other tribes.

But some tribes, viewing the compacts as an attack on their sovereignty, are fighting back. One near San Bernardino, upset with what it called Schwarzenegger's ``take-it-or-leave-it'' attitude toward the negotiations, donated $10 million to Proposition 70, setting up what is likely to be an intense political tug-of-war for voters on Nov. 2.

``I've always said our people didn't die and suffer for us to give away our sovereignty that easy,'' said Tribal Chairman Deron Marquez of the San Manuel Band of Mission Indians.

Proposition 70, sponsored by the Agua Caliente Band of Cahuilla Indians near Palm Springs, would preclude the state from regulating Indian gaming. It would lift the ban on high-stakes games like roulette and allow tribes to expand their operations without oversight or input from municipalities.

In exchange, tribes would pay the state the corporate income-tax rate of 8.84 percent, a deal Proposition 70 lead consultant Gene Raper said is better for taxpayers than Schwarzenegger's compacts. Initiative proponents might spend nearly $50 million on an effort that will include radio and television ads and other types of campaigning.

``The governor was the first one to say 'fair share,''' Raper said, referring to Schwarzenegger's successful recall campaign platform criticizing tribes for not paying state taxes on their earnings. ``Now it seems the governor wants them to pay more than everybody else. I haven't figured that out.''

Proposition 68 would require tribes to pay 25 percent of their revenue to the state, or share their gaming monopoly with a group of 16 card clubs and racetracks located in mostly urban areas in Northern and Southern California. Card clubs and racetracks would pay a percentage of their revenues to the county governments in which they are located, not to Sacramento.

A tribal gaming insider said Schwarzenegger is preparing to film television commercials and make campaign appearances in his effort to defeat both measures, adding he will work hand in hand with his tribal allies.

With so much focus on Propositions 68 and 70, Schwarzenegger also has to save time, and possibly resources, to campaign for the passage of Proposition 1A, the proposed constitutional amendment to prevent the state from raiding local property and sales-tax funds.

The governor promised California's cities and counties he would help secure voter approval of Proposition 1A in exchange for their contributing $2.6 billion to help the state close a multibillion-dollar deficit. As part of the deal, municipalities also agreed to abandon Proposition 65, which would have given them even more protection than Proposition 1A.

David M. Drucker, [phone]

david.drucker(at)dailybulletin.com