Senate Bill 138 Has Deep Roots in Settler Colonialism

On this day (February 8) in 1887, Congress passed the General Allotment Act, also known as the Dawes Act, with the ultimate purpose of dissolving tribal governments and reservations and assimilating American Indians into non-Indian society. Last week, Senate Tax heard Senate Bill (SB) 138, a bill with deep roots in this settler-colonial policy.

What Is Senate Bill 138?

SB 138 would repeal the five-year tribal property tax exemption for fee-to-trust transfers that the 2011 Legislature created with SB 412. The 2019 Legislature voted down two bills related to SB 138: House Bill (HB) 401 and HB 733.

How Senate Bill 138 Is Connected to Allotment?

SB 138 is possible because of allotment. When Congress began the allotment and assimilation era in 1887, it divided communally held reservation lands into individual parcels without tribal consent, allocated parcels to tribal citizens and households, and sold “surplus” parcels to non-Indian settlers, most often without compensating tribal nations. In total, the U.S. government took more than 90 million acres (roughly the size of present-day Montana) from tribal nations.

Now, reservation lands are a patchwork pattern of ownership and land status types, with land generally falling into one of two status types: trust or fee. This has tax implications. Trust land is held in trust by the federal government and includes land collectively owned by a tribal nation and allotments to tribal citizens. Trust land is exempt from property taxes. Fee land is generally private property and can be owned by American Indians and non-Indians. Because of the forced allotment of reservation lands, state and local taxing jurisdictions may assess property taxes on tribally owned fee land.

As intended, allotment had devastating consequences for tribal communities. In 1934, Congress ended the allotment era when it passed the Indian Reorganization Act (IRA). Under the IRA, tribal nations and the federal government can return fee land to trust status. The process can be lengthy and costly to tribal nations. To facilitate those transfers and to recognize that one government did not want to tax another while the wheels of the federal government turn slowly, the 2011 Montana Legislature passed SB 412.

By attempting to repeal this exemption, SB 138 ultimately places a greater burden on tribal nations seeking to reclaim land stolen under allotment.

A Better Path Forward

Rather than impose property taxes on tribally owned reservation land, the Legislature should work to dismantle the legacy of allotment by expanding the tribal property tax exemption. This would be consistent with the treatment of other government-owned property in Montana, where property that is owned by federal, state, and local governments is tax-exempt. SB 138 targets land owned by tribal governments, disregarding and dishonoring the government-to-government relationship and political status of tribal nations as sovereign.

Expanding the exemption would also be consistent with the approach that other states take. Oregon, for example, exempts tribal lands from property taxes when a fee-to-trust application is pending. There are time constraints. Idaho exempts tribally owned reservation land altogether, in an effort to treat all government properties the same, whether federal, state, county, or tribal.

What Is Next?

Although it was recognized as bad policy long ago, tribal nations continue to feel the impacts of allotment today. MBPC opposes SB 138 and will continue to track its progress. If the 2019 legislative session is any indication for what to expect, LC0726 could come next. This bill would allow counties to recapture property taxes should the federal government deny a trust application or should the five-year exemption expire. MBPC would also oppose this bill.

For a deeper dive into the land status of Indian Country, see MBPC’s report, Policy Basics: Land Status of Indian Country.

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