Tulalips want sales-tax money from mall

TULALIP RESERVATION — In a year when tax revenue is particularly sought after, the Tulalip Tribes announced yesterday their legislative strategy to start receiving sales-tax revenue from their Quil Ceda Village development near Marysville.

The state and Snohomish County now get all of the sales-tax revenue from the Wal-Mart, Home Depot and other stores in the shopping center, which the tribes developed two years ago on the Tulalip Reservation.

Annually, that comes to between $11 million and $50 million, a consultant said yesterday, depending on sales.

If the Tulalip Tribes are successful lobbying in Olympia next year, it could change the way tribes all over the state develop their land, said Jonathan Taylor, whose Massachusetts-based company, Lexecon, was paid $42,000 to do a tax study for the tribes. The study indicates Quil Ceda Village has the same attributes as cities, which can collect a share of the sales-tax revenue.

The sales-tax issue is tied to a dispute between the tribes and Snohomish County about whether the county can collect property taxes from Quil Ceda businesses. The tribes already get property taxes from the stores and didn't know until last week that the county does, too, said tribal spokesman John McCoy.

McCoy, who last month was elected to the state House of Representatives from the 38th Legislative District, called the county's property taxation "inappropriate."

But Snohomish County Assessor Gail Rausch said she doesn't see why the buildings would be exempt from the county's property tax. The land underneath the building is exempt because it's tribal trust land, but the buildings are not owned by tribal members and therefore are taxable by the county. Rausch said she didn't know how much the county collected from the property this year.

This will be the tribes' third legislative push to collect sales-tax revenue — last year, one bill never made it to a floor vote, and another, in 2000, stalled in committee. But the tribes say they are doubling their strategy this year, with two separate bills.

The tribes will make a second attempt to pass a version of last year's bill allowing them to receive the full 8.5 percent sales tax collected in Quil Ceda Village. That bill won't pass, McCoy said.

"It'll be introduced until my grandsons get it passed," he said.

But a second bill has a better chance, he said. That one will ask the state to recognize Quil Ceda Village as a city without requiring a municipal incorporation. The Bureau of Indian Affairs and the Internal Revenue Service already recognize Quil Ceda as a city. If the bill passes, the tribes could collect the local-option tax on sales in Quil Ceda, just like other cities and counties do on sales in their jurisdictions.

The tribes don't want to incorporate Quil Ceda Village into a state-recognized city because of their sovereignty. They fear incorporation could lead to loss of some federal treaty rights.

The study released yesterday compares the commercial center west of Interstate 5 to nearby Marysville and concludes that "because the tribes do not reap what they sow, the state is reaping what it does not sow," said Taylor.

Taylor said the tribes are "subsidizing" Quil Ceda operations by building and maintaining the development, then exporting all the tax money to the state and the county, even though they have citylike needs of their own. The tribes have spent about $50 million on Quil Ceda Village so far and plan to spend $20 million more before it is complete.

Emily Heffter: 425-783-0624.