Native American Press/Ojibwe News

RLTC to face difficult budgeting priorities for 2003

November 22, 2002
It’s been nearly nine months since a recall petition forced Red Lake tribal treasurer Dan King from office. Since that time, all of his supporters in the council have either resigned or have been defeated in tribal elections, and a forensic audit and other reviews of his financial management are underway.

Since the recall of King, Red Lakers have elected six new members to the tribal council and re-elected the three former members who were not part of King’s “fab four” inner circle. Among the big issues of this year’s campaigns were fiscal responsibility and community demands for an accounting of substantial sums of money spent by King and the fab four, particularly on the River Road water park and hotel development.

Since September, several audits have been done for Fiscal Year 2001, a fifteen-month “year” which ran from October 1, 2000 to December 31, 2001. The audits and other reports have revealed substantial losses, including: -$1,333,141 from Red Lake Industries (Modular Homes); -$114,743 from Red Lake Custom Doors II; approximately -$120,000 from Red Lake Retail (the “Trading Posts” in Red Lake and Ponemah), and -$116,136 from Red Lake bottled water.

The Department of Justice has done an “exit audit” of the approximately $10 million involved in construction of the Red Lake Detention Center. There are rumors that some of the expenditures made as a part of the detention center project are questionable, and this could prove to be another financial liability for the tribe.

It is difficult to assess the financial situation at Red Lake Gaming Enterprises. We know that the River Road development was overspent by $12 million, but some of the over-expenditure was “made up” by tribal loans and use of operating funds from the casino which should have gone to tribal programs. Those have not been completely audited yet, and tracking the commingled and transferred funds requires scrutiny of all of the tribal financial records. The most recently completed audit of Red Lake Gaming was for the old fiscal year, October 1, 2000 to September 30, 2001.

The information that we have so far is the result of concerted efforts by the new council, and tribal treasurer Dan Seki, to get to the bottom of the financial problems at Red Lake. We need to have the audit of the general funds completed. That audit has dragged on for several months, and it is not clear exactly why it has taken so long to audit those funds.

According to the annual financial report prepared by the Red Lake Band for the Fiscal Year ending December 31, 2001, the tribal general fund involves two “governmental fund types”: “general” and “special revenue.” The FY 2001 report includes a “memorandum” showing a total tribal general fund budget of $60,711,543, nearly all of it ($55,726,435) federal money. It also shows an over-expenditure of $ 4,402,260. The King-Whitefeather council pulled $7,924,083 out of tribal trust funds to cover the $4 million shortfall and other unidentified expenses. Some of the money undoubtedly went into the casino development, but we will not be able to determine exactly what happened until the final report of the forensic audit is presented to the council and the audit of the FY 2001 general funds is complete.

No date has been set for when the forensic audit final report will be made, or for when the FY 2001 audit of the general funds will be done.

Also, with the close of the calendar year, the council will be having to prepare a budget for the calendar year 2003. Without the audits for 2001 this will be more difficult, both in terms of responsible budgeting and in terms of persuading the federal government to make the appropriations.

According to preliminary reports, losses from some of the tribal enterprises will be less for the new calendar year 2002 than they were during the previous year.

Responsible fiscal management and budgeting for next year is crucial, since the federal administration and state administration have changed, priorities have changed, and the political climate has changed. With competing demands for funding for homeland security and increasing federal expenditures for weapons and other preparations for war, there is clearly going to be less funding available for Indian programs.

There is a limited amount of money in the tribal trusts that is available to the tribal council. $40 million of the money is earmarked for reforestation, and it would probably take an Act of Congress to change that.

It’s going to be crucial that the audits are completed and available to the council and to the Red Lake people, as soon as possible.

Red Lake voters have given the new tribal council a very clear mandate to bring fiscal responsibility to Red Lake.