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Tribal gasoline sales: happiness for motorists, headaches for state

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SANTO DOMINGO PUEBLO, N.M. (AP) _ It's mid-afternoon on a Friday, and the line of cars, trucks and sport utility vehicles stretches from the shiny new gas pumps out to the road.

``We've been like this since about 10:30 this morning,'' said station manager Sebastian Lovato, watching drivers jockey for position at the 14 pumps.

Customers find it worth the wait. Gasoline is $1.45 a gallon for regular and $1.59 for premium at the tribal-owned station _ a savings of at least 30 cents a gallon over prices in Santa Fe, 25 miles away.

Gas stations on tribal lands are making motorists happy, but giving state officials headaches.

In New Mexico, the sale of gasoline on Indian lands is exempt from the 17-cents-a-gallon state gasoline tax, although tribes impose a tax of their own. With no land costs and less governmental red tape, Santo Domingo Pueblo's operation can easily undercut their off-reservation competitors.

State Highway and Transportation Secretary Pete Rahn says his agency is feeling the pinch of the lost revenue, and he worries it will only get worse.

``If prices continue to go up, there's going to be even more interest in saving a few pennies,'' Rahn said.

Fuel taxes feed the $300 million-plus fund that used to maintain New Mexico's highways. For a variety of reasons _ including a worsening economic climate _ growth in the fund is nearly flat.

In the year that ended June 30, 2000, tribes sold some 73 million gallons of state tax-exempt gasoline, according to the Taxation and Revenue Department. It's estimated this year's sales could reach 100 million gallons, which would cost the state road fund $13 million, up from about $9.5 million last year.

Rahn says shortsighted drivers will end up paying for damage to their vehicles from deteriorated roads, but Mike Courtney, filling up his Chevy Impala with premium at Santo Domingo, wasn't persuaded.

``It's $1.95 in Santa Fe right now,'' said Courtney, a college student. ``I'm trying to save my money.''

Santo Domingo Pueblo, which has had a small gas station since 1984, used a loan guaranteed by the Bureau of Indian Affairs to open a modern new station with pumps that take credit cards and an expanded convenience store.

Business is up about 40 percent, Lovato said, despite competition from a recently opened station at San Felipe Pueblo, just a few miles south.

The New Mexico Petroleum Marketers Association isn't happy about the potential impacts of growing tribal gas sales.

The consumer won't see the problem ``until he runs his car off into a pothole because it can't be fixed,'' said Ruben Baca, who heads the industry group.

Tax-free gasoline sales have been a divisive issue in other states. In New York _ where a melee between state police and Indian protesters erupted near Syracuse four years ago _ it's still unresolved after more than a decade.

In western Iowa, convenience store owners complained recently that the Winnebago Tribe of Nebraska is underselling them. The tribe stopped collecting state taxes _ 20 cents in Iowa and 24 cents in Nebraska _ at its on-reservation stations, and instead imposed a 3-cent tribal tax.

While states cannot tax tribal sales to tribal members, they can tax tribal sales to non-members. Doing so, however, is impractical.

``Most cash registers don't have an Indian (or) non-Indian key,'' said John Dossett of Portland, Ore., general counsel for the National Congress of American Indians.

Instead, some states have reached special agreements with tribes under which the tribes get rebates for passing along the state tax at their pumps.

Wyoming, for example, refunds 14 cents _ the amount of the state tax _ for every gallon bought by tribal members on the Wind River Reservation.

North Carolina uses a complicated rebate formula for the Cherokees based on the number of vehicles owned and miles driven, while in Oklahoma, the state refunds a portion of tax revenue back to tribes for road projects and health, education and public safety programs.

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