Our State is in dire fiscal trouble. There is no question that tough decisions will have to be
made and budgets will be cut. While We cannot save every program, there is critical
funding that must be retained. Schools, and more importantly our children, are facing a
possible reduction in funding to levy equalization.

The Governor has made clear she wants to see levy equalization be reduced significantly.
This is unacceptable. Leaders in our Republican caucus met with the Governor and
explained that House Republicans would not support changes or reductions to levy
equalization. We are united in this cause and will not waiver.

I believe that there are many other options which could get our State the money which
Governor Gregoire plans to find by cutting levy equalization. There has been a tax loophole
that has been in plain sight for years yet no one has ever addressed it. I am talking about
Tribal tax loopholes. There is potential to save our State over $300 million which would be
enough to offset potential cuts to levy equalization. Here is how it breaks down:

Tribal fuel tax: Return state to formula-based revenue sharing agreements. Currently,
tribes get keep 75 percent of fuel tax revenue.

Tribal cigarette tax: Require future contracts to share 30 percent of tribal cigarette tax
revenue with the state. Currently, only the Puyallup Tribe has a revenue sharing agreement
for cigarette taxes.

Property tax exemptions: Close loopholes for non-trust land owned by Indian tribal
governments.

Currently, more than $146 million of property value is exempt, and the taxes are shifted to
taxpayers.

Allow 65 non-tribal card rooms that operate at least five card games or have operated for
at least five years to upgrade from pull tabs to electronic scratch ticket machines. Currently,
only tribal casinos have this luxury.

Allow non-tribal facilities to operate machines already allowed in the state, at no more than
200 machines per location, not to exceed 7,875 machines statewide.

Allow in the local governments to share 35 percent of net revenue. Local governments
would receive 5 percent of net revenue.

The state share would be distributed as follows:

50 percent to fund K-12 education $95 million
30 percent to fund safety net programs $57 million
20 percent to fund public safety $38 million

We must protect levy equalization and this is a practical way to take out a tax loophole and
raise the funds needed to maintain levy equalization.