economic & workforce development

FISCAL YEAR 2020 INDIAN COUNTRY BUDGET REQUEST | 87

HUMAN SERVICES | BUDGET REQUEST

Economic & Workforce DevelopmentIncreasing economic opportunities and infrastructure development in Indian Country requires a comprehensive, multi-agency approach. Indian Country continues to face daunting challenges, especially high rates of unemployment and poverty, due to shortfalls in federal obligations and barriers to private and philanthropic investment. Adequate federal funding, coupled with reduced regulatory burdens, can advance tribes’ efforts to access capital resources and workforce training programs. Honoring the federal government’s trust responsibility by addressing key economic needs will further the economic drive of Indian Country through increased business and workforce development opportunities. These FY 2019 budget requests set forth appropriations that are essential to empowering self-determined tribal efforts to seed economic prosperity and advance the economic security of tribal nations.

Key Recommendations

DEPARTMENT OF COMMERCE

Commerce, Justice, Science Appropriations Bill Minority Business Development Agency (MBDA)

• Provide $39 million for the Minority Business Development Agency.• ContinuetheinitiativetoprovideMBDAsupportforAmericanIndian/AlaskaNative(AI/AN)

Business Centers.

Established by Executive Order in 1971, the Minority Business Development Agency (MBDA) was created to support minority business development centers that provide business consulting and financing services. Initial funding for the MBDA was set at $63 million, and MBDA funded Native American Business Enterprise Centers (NABECs). Over time, the MBDA’s funding level

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ECONOMIC & WORKFORCE DEVELOPMENT | BUDGET REQUEST

has decreased roughly 50 percent. Providing funding of at least $39 million will enable the MBDA to continue supporting its MBDA Business Centers (MBCs), and dedicating a significant portion of that amount to AI/AN business centers will ensure tailored assistance to tribal nations, tribal enterprises and other Native American-owned businesses. Congress should set aside sufficient funds within the MBDA budget to continue grant support for entities qualified to provide the business, financing, and procurement technical assistance services that Native American businesses need to develop stronger private sector capabilities and contribute to the national economy. MBDA should also continue to support federal contract awards to Native American contractors, track Native American as well as minority business data, and collaborate with the Office of Native American Business Development.

DEPARTMENT OF COMMERCE

Commerce, Justice, Science Appropriations Bill Office of Native American Business Development

• FundtheOfficeofNativeAmericanBusinessDevelopmentataminimumof$2millionaspart of the Commerce Department Management Budget.

The establishment of the Office of Native American Business Development (ONABD) was codified by the enactment of the Native American Business Development, Trade Promotion and Tourism Act of 2000, Public Law 106-464 (the 2000 Act). However since its establishment, ONABD has relied on base resources from the Minority Business Development Agency (MBDA) to coordinate federal programs for financial and technical assistance to increase business, expand trade, and support economic development on tribal lands. For example, the FY 2016 budget request for the MBDA noted the absence of appropriations to support ONABD since it was created by the 2000 Act, and also the lack of appropriations to implement other aspects of PL 106-464 and the Indian Tribal Regulatory Reform and Business Development Act of 2000.

In order to carry out its mission, ONABD must receive adequate and sustained support to implement and expand Native American policy and business development initiatives both domestically and internationally. Funding ONABD through Commerce’s Departmental Management budget would fulfill Congress’ intent for this Office to direct Commerce’s broad authorities to expand business development, trade promotion, and tourism within Indian Country, and externally, facilitate the regulatory reforms determined necessary to enhance such economic development and commercial expansion. Supported ONABD functions would include: serving as the economic development lead on Native American programs within the Department; coordinating with other cabinet departments and agencies; conducting outreach to tribal nations, tribal enterprises, and Native businesses; and enhancing business and financial management training.

SMALL BUSINESS ADMINISTRATION

Financial Services Appropriations Bill Office of Native American Affairs

• FundtheSmallBusinessAdministration’s(SBA)OfficeofNativeAmericanAffairsataminimum of $2 million.

The SBA’s Office of Native American Affairs (ONAA) provides vital assistance to tribal nations; Alaska Native Corporations (ANC) and Native individual-owned businesses in navigating the SBA’s business assistance, procurement-related, and lending programs. Recent FY budgets have provided SBA line-item funding of $2 million for “Native American Outreach” to facilitate ONAA’s outreach to and coordination with tribal communities and businesses to connect them with business tools and other important resources for tribal and AND-owned corporations and individual Native American entrepreneurs. For example, the SBA’s FY 2014 Annual Performance Report noted the successes of its Native American outreach, including over 70 events attended by 200 tribal communities. Maintaining a $2 million funding level for ONAA would enable the Office to continue its efforts and maximize outreach to Native people, advance successful initiatives like its tribal and business executive training and its participation in multi-agency workshops and Native supplier initiative events around the country. ONAA also can be



instrumental in spurring business development with SBA loans, and initiating review of the extent to which SBA loan guarantees are used in financing business loans in Indian Country and ways to increase such usage.

Further, ONAA has been integral in facilitating Native American contractors’ participation in the SBA’s 8(a) Business Development Program, HUB Zone, women business, veteran and service disabled veteran business, and other small business contracting programs. ONAA is a critical resource for all types of Native-owned businesses as it works to ensure these businesses gain access to capital, build capacity, generate increased revenues, create more jobs, develop tribal business codes, and strengthen the economic security of Native communities.

DEPARTMENT OF DEFENSE

Defense Appropriations Bill, Operations & Maintenance – Defense-Wide Procurement Technical Assistance Centers, Defense Logistics Agency

• Fully fund the American Indian Procurement Technical Assistance Program at $4.5 million within the $42.3 million funding for the Procurement Technical Assistance Program.

For decades, the Defense Logistics Agency (DLA) has supported the Procurement Technical Assistance Program (PTAP) by providing cooperative agreement assistance to Procurement Technical Assistance Centers (PTACs). Many of these centers are housed within educational institutions that help support their operations. Beginning in the early 1990s, DLA began to fund American Indian Procurement Technical Assistance Centers (AIPTACs) that serve more than one Bureau of Indian Affairs (BIA) area. Six such AIPTACs have operated across the country, all non-profit entities that must raise operational funds and the private match for the cooperative assistance funding they receive from DLA. AIPTACs offer valuable assistance to tribal and other Native-owned companies in navigating the large, complex federal procurement market, securing government contracts, and complying with extensive government procurement and other regulatory requirements. The FY 2019 funding set-aside of $4.5 million for AIPTACs is commensurate with the amount authorized per Statewide PTAC and per AIPTAC (even though the service area of each AIPTAC is much larger than just one state). Congress has supported the continued growth of PTAP, funding the program at over $42.3 million for FY 2019. PTAP funding for FY 2020 should increase or at least remain level and maintain the $4.5 million set-aside for AIPTACs. In addition, the Department of Defense should consider restructuring PTAP and related programs to ensure that AIPTACs are able to serve all states, as currently only about half of the country is being serviced.

DEPARTMENT OF DEFENSE

Defense Appropriations Bill, Procurement – General Provisions Indian Incentive Program

• Fund the Indian Incentive Payment Program at a minimum of $25 million.

Under Section 504 of the Indian Finance Act (25 U.S.C. 1544), a contractor may receive additional compensation of five percent of the amount paid or to be paid to a Native American subcontractor or supplier under a federal contract. Since FY 1991, Congress annually has appropriated funds for the Department of Defense (DOD) to make Indian Incentive Payments (IIP) to contractors that subcontract work to Native-owned subcontractors under DOD contracts. For FY 2009-2018, Congress appropriated $15 million annually for the IIP program, but demand has always exceeded the funding made available. To cover already approved, but still unfunded IIP requests, and to encourage continued participation in the program, for FY 2019 Congress provided $25 million and specified the funding “shall be available for the incentive payments authorized by” 25 U.S.C. 1544. For FY 2020, Congress should approve the same funding level and mandatory language regarding its usage.



DEPARTMENT OF THE TREASURY

Financial Services Appropriations Bill Community Development Financial Institutions (CDFI) Fund

• Provideaminimumof$20millionfortechnicalandfinancialassistanceundertheNativeAmericanCDFIAssistance(NACA)Program.

• Makepermanentthewaiverofthenon-federalmatchrequirementfortheNACAfinancialassistance program.

The Native Initiative of the CDFI Fund is an important program that expands access to capital for individuals and small businesses in Indian Country. Each year, the CDFI funds the Native American CDFI Assistance (NACA) program, which includes financial and technical assistance components. The NACA program makes awards that assist community development financial institutions (CDFIs) in increasing their lending services and financial products, and in building their own internal capacity to serve their target markets. Native CDFIs provide a wide range of loans to microenterprises, small businesses, consumers, and for housing and homeownership. Native CDFIs also offer financial education and entrepreneurial development training, homebuyer education and foreclosure prevention counseling, credit counseling, small business planning, debt relief counseling, counseling to improve financial capability, match savings programs called Individual Development Accounts, and free tax preparation services in Native communities across the country. In many areas, Native CDFIs provide the only affordable alternative to predatory financial services providers.

For FY 2018, the NACA program received 53 applications for Financial Assistance and Technical Assistance funding totaling $33.6 million, but the CDFI Fund was only able to award 38 organizations with funding that totaled $15.1 million.82 With more than 73 certified Native CDFIs and many more in the certification pipeline, demand for support under the NACA program is expected to continue to increase. The CDFI Fund’s budget line item for NACA remained at $12 million from FY 2009 to FY 2013, notwithstanding the industry’s growth from only nine certified Native CDFIs in 2001 to 70 in 2014. Given continued increasing demand and demonstrated impact, Congress should strive to increase the current annual allocation to at least $20 million for the NACA Program for FY 2020 to support current initiatives and emerging Native CDFIs and to continue specialized training and technical assistance as part of the CDFI Fund’s Capacity Building Initiative. In addition, Congress should continue to waive the non-federal match requirement for NACA financial assistance. This budget-neutral provision would continue to stimulate the flow of capital in underserved Native communities and help to address the unmet capital need of $47 billion in Native communities.83

DEPARTMENT OF THE TREASURY

Financial Services Appropriations Bill Community Development Financial Institutions (CDFI) Fund New Markets Tax Credit (NMTC) Program

• Provide a 10 percent set-aside and revise ‘service area’ to include Indian Country.

In 2000, Congress established the New Markets Tax Credit (NMTC) Program to spur investment in projects located in low-income communities. According to the CDFI Fund, for every $1 invested by the federal government, the NMTC Program generates over $8 in private investment.84 Unfortunately, however, NMTC Program funding “has rarely made its way into Indian Country.” Between 2014 and 2017, as an example, only one Native CDE received a funding allocation of $20 million of the $15 billion made available during that period.85 Considering the far greater value of tax credits that have been deployed throughout the country, and the program’s potential for significantly increasing economic growth in Indian Country, steps must be taken to ensure that tribal communities and tribally-focused CDEs receive a greater share of these valuable tax credits.

The CDFI Fund’s robust budget should include a 10 percent set-aside for Indian Country to ensure that Native CDEs (which can include Native CDFIs) receive NMTC allocations commensurate with the tremendous need for greater business and economic development in Native communities across the country (alternatively, Treasury could accord all tribal applicants an extra five



“priority” points to make them more competitive in the application process, thereby increasing their chances of receiving NMTC investments). To enhance the likelihood that tax credits will be deployed in Indian Country, the service area of all participating CDEs should be revised to include Indian Country, so that CDEs are free to use allocations in any tribal project nationally, or the set-aside should be allocated to CDEs dedicated to serving Indian communities as their target populations.

DEPARTMENT OF ENERGY

Energy and Water Appropriations Bill National Nuclear Security Administration (NNSA)

• MinorityServingInstitutionsPartnershipProgram(MSIPP)TribalCollegeInitiative

Report language is needed to accompany the FY 2019 Energy and Water Development, and Related Agencies, Appropriations bill designating $5 million of the funds appropriated for the Department of Energy, National Nuclear Security Administration (NNSA) Minority-Serving Institutions Partnership Program (MSIPP), specifically for the Tribal Colleges and Universities (TCUs) Advanced Manufacturing Network Initiative. Now in its third year, the AIHEC/TCU Advanced Manufacturing Network Initiative is an innovative advanced manufacturing training and education program involving five TCUs that prepares an American Indian advanced manufacturing workforce – through certificate and four-year degree programs – and is creating reservation-based economic and employment opportunities through design, manufacture, and marketing of high-quality products in partnership with tribal nations, major industry, and the National Laboratories. Full funding of the project will allow AIHEC to engage more TCUs as well as National Laboratory and industry partners, establishing a technically skilled workforce and manufacturing base in Indian Country prepared to support the engineering and technology needs of the nation.

DEPARTMENT OF THE INTERIOR

Interior - Environment Appropriations Bill Office of Indian Energy and Economic Development (OIEED) Guarantees for Indian Loans, Surety Bonds, Development Bonds

• Fund the OIEED Indian Loan Guarantee Program at a minimum of $25 million.

The Office of Indian Energy and Economic Development’s Division of Capital Investment oversees the Indian Loan Guarantee Program and loan subsidy program, and has authority to support surety bonding for Indian contractors. The OIEED Loan Guarantee Program is the key federal guarantee program that facilitates the process for eligible tribal and individual Native borrowers to obtain conventional lender financing for businesses and economic development projects that will have an economic impact on a Native American community or BIA service area. BIA-certified lenders are those willing and able to lend to tribal nations and Native businesses on reservations and which submit to tribal court jurisdiction (whereas SBA-certified lenders must adjudicate loan defaults in federal court). OIEED also operates a revolving credit facility (the SBA has no such support). As lending conditions have improved, demand has far outstripped what the program can guarantee Native borrowers seeking private loans. This successful program represents an impressive return of $15 in private sector lending for every $1 in federal funds backing the guarantees. In response to persistent calls from Indian Country to fortify this key program, the House markup of the Interior-Environment bill signed off on FY 2019 funding of nearly $20 million for the program, and an aggregate cap of $329 million of guaranteed private sector loan financing (more than doubling previous caps). This level of guarantee support should be continued for FY 2020 to accelerate financing of business, economic, energy and infrastructure projects, support lines of credit for working capital and payrolls for hiring new employees, and even provide assurances sufficient for sureties to issue performance bonds to tribal or other Native-owned business contractors performing infrastructure and other construction contracts.



DEPARTMENT OF THE INTERIOR

Interior - Environment Appropriations Bill Office of Indian Energy and Economic Development (OIEED)

• Fundaminimumof$25millionforOIEED,withatleast$5millionspecificallytoadvanceitsenergy and economic development initiatives, fund business plans and feasibility studies, and assist with model tribal leasing and environmental ordinances.

The Department of the Interior’s Office of Indian Energy and Economic Development (OIEED) promotes tribal renewable and conventional energy development and mineral resource development for the purposes of economic development. OIEED is responsible for many creative and successful initiatives that encourage energy resource development on tribal lands, spur economic and business development assistance and training, expand job and skills training opportunities, and leverage limited federal funding to provide access to capital for business development.

OIEED has received over $20 million annually, but very little of its budget is available specifically for economic development support. However, OIEED has been increasingly effective in stretching its limited funding to launch creative and successful initiatives, including: technical assistance and capacity building workshops and support for feasibility studies to spur economic and business development, expand job and skills training opportunities, and improve and streamline the delivery of financing to tribal nations, tribal enterprises, and individual Indian-owned businesses for business development. The collaboration and direct relationship between OIEED and the Office of the Secretary has been key to OIEED’s effectiveness, and therefore, the structure should always be maintained. Further, to expand upon OIEED’s successful activities, there are other increased funding opportunities that would enable the OIEED to: (1) provide grants to tribal nations for feasibility studies for business and economic development projects; (2) expand the scope and usefulness of its Indian Loan Guarantee Program; (3) fund tribal nations to explore adoption of the Model Secured Transaction Agreement (MTSTA), enhance codes that tribal nations have already adopted, and work with host states to develop agreements to use state registries to record liens/financing statements arising from tribal codes.

Further, with additional funding, the grant program authorized under Title V of the Energy Policy Act of 2005 could be established and would provide important funding to develop tribal capacity in managerial and technical capabilities, develop energy resource integration projects, and establish and maintain environmental programs in support of energy programs. This funding would be especially useful to tribal nations seeking to establish leasing/environmental programs pursuant to the provisions of the HEARTH Act (PL 112-151) because such grants can be used to establish the tribal regulatory programs necessary to qualify under that Act.

DEPARTMENT OF LABOR

Labor, HHS, Education Appropriations Bill Employment and Training Administration, YouthBuild Program

• MaintainYouthBuildProgramfundingataminimumof$89millionforFY2020(consistentwithWIOASection171).

The YouthBuild program is a workforce development program that provides significant academic and occupational skills training and leadership development to youth ages 16-24. The program recruits youth who have been adjudicated, aged out of foster care, dropped out of high school, or are otherwise at risk of not having access to workforce training. Engaging approximately 10,000 youth annually, it provides students an innovative alternative education program through personalized instruction leading them to earning their GED or high school diploma, while simultaneously helping them develop skills that will make them more competitive applicants when they enter the job market.

YouthBuild reports that since 1994, more than 148,000 YouthBuild students have built 32,000 units of affordable and increasingly green housing in rural and urban communities across the United States. Each year, YouthBuild is forced to turn away thousands of people because of inadequate funds. There are a number of tribal YouthBuild programs in several states, and Native Americans make up roughly three percent of YouthBuild participants.



It is critical that Congress fund the YouthBuild program at a minimum of $89 million for FY 2020, and that Native youth receive program support from this funding pool that is commensurate with their percentage of the eligible participant population as well as their identified needs.

DEPARTMENT OF LABOR

Labor, HHS, Education Appropriations Bill Employment and Training Administration, Indian and Native American Program

• FundtheDepartmentofLabor’sIndianandNativeAmericanProgram(INAP)ataminimumof$60.5 million.

Reducing the education and employment disparity between Native peoples and other groups requires a concentrated effort that provides specific assistance to enhance education and employment opportunities, creates pathways to careers and skilled employment, and prepares and maintains a pathway for Native people to join the nation’s middle class. The Workforce Innovation and Opportunity Act (WIOA) Section 166 program serves the training and employment needs of nearly 30,000 American Indians and Alaska Natives through a network of 121 grantees funded under the Comprehensive Service Program (Adult) and the Supplemental Youth Service Program (Youth) alone.

As the only federal employment and job training program that serves American Indians and Alaska Natives who reside both on and off reservations, it is imperative that funding be maintained at an adequate level for the WIOA Section 166 program. Native citizens living on remote reservations or in Alaska Native villages experience great difficulties accessing the state and local workforce. In these areas, the WIOA Section 166 program is the sole employment and training provider.

Despite the reauthorization of Indian and Native American Programs through WIOA in 2014, funding of this program has not been adjusted to account for the drastic changes in the economic environment and growth in the Native American population since the 2000 Census. According to the Census, the American Indian and Alaska Native population grew 27 percent between 2000 and 2010 compared to nine percent for the general population. Accordingly, the federal government should increase funding for DINAP and WIOA commensurate with this expanded need (and also do the same for other vital Native American workforce development and related grant programs such as the BIA’s Job Placement and Training, Department of Education’s Adult and Vocational Education, Tribal TANF, and Tribal Vocational Rehabilitation programs, to name a few). Such increases should be based not only on the significantly expanded size of the service population, but also increases in the cost of services such as tuition for post-secondary educational institutions. Congress should reject outright the proposal to eliminate the stand-alone funding mechanisms for the WIOA Section 166 and PL 102-477 workforce development programs in favor of formula funding for Native people in need of such programming, which would effectively amount to a decrease of nearly $50 million in funding support for this population.

DEPARTMENT OF LABOR

Labor, HHS, Education Appropriations Bill Native American and Employment Training Council

• Fund the Native American Employment and Training Council at $125,000 from non-INAP resources.

The Workforce Innovation and Opportunity Act also authorizes the Native American Employment and Training Council to advise the Secretary on the operation and administration of INAP, but it uses funds that are intended for Indian and Native American Program (INAP) grantees. The Secretary should use other streams of funding to support its advisory council. Without an increase in funding, many tribes are unable to access the support and training activities for employment opportunities in Indian Country.

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E C O N O M I C A N D W O R K F O R C E D E V E L O P M E N T

Across Indian Country, tribal nations are achieving economic progress. From creating successful nation-

owned enterprises to cultivating tribal citizen-owned businesses to preparing their people to take full

advantage of expanding economic and job opportunities, tribal nations are building sustainable

economies and revitalizing their communities. However, while many tribal nations are building strong

economies, many other tribal nations are still in need of the tools and resources necessary to follow suit.

The policy overviews below demonstrate how focused attention and targeted actions by the federal

government – in consultation and collaboration with tribal governments and key national Native

organizations – can greatly enhance the ability of tribal nations to achieve economic prosperity and

provide their citizens with job opportunities and a good quality of life.

TAXATION AND FINANCE

In December 2017, the Tax Cuts and Jobs Act was signed into law. However, the final tax reform

legislation did not include any tribal tax priorities. Congress and the Administration missed an

opportunity to recognize the tribal nations’ rightful place alongside other governments and to incentivize

increased investment in tribal economies and infrastructure.

Despite the passage of tax reform legislation, tribal governments are still left without many of the

benefits, incentives, and protections provided by the Tax Code to state and local governments. This

inequity significantly handicaps tribal sovereign authority to generate and allocate government revenue

for tribal programs independent of federal appropriations and does not encourage economic growth on

tribal lands. For these reasons, Congress and the Administration must actively engage with tribal nations

to develop federal tax policies that ensures tribal governments have the same opportunities as state and

local governments to provide services to their own citizens.

Tribal Tax Priorities

Provide Tax Parity to Tribal Governments: Members of Congress and tribal nations have worked

together to identify provisions in the tax code that treat tribal governments differently than state and

local governments. Congress should fix these disparities in the following areas:

• Tax-Exempt Bonds: Unlike other governments, tribal nations can only use tax-exempt bond

financing for “essential government functions,” oftentimes excluding tribal economic

development activities even though state and local governments routinely use tax-exempt

financing for similar development projects. This limitation on tribal nations greatly inhibits

infrastructure deployment and economic growth.

• Government Pension Plans: Unlike other governments, tribal nations must have separate types of

pension plans (government and private) based on an employee’s job activities. Tribal nations are

the only governments that incurs the monetary and compliance costs of maintaining two separate

pension plans, and they must be able to operate a single, comprehensive, government pension

plan for all their employees.

• Tribal Foundations and Charities: Charities funded or formed by tribal governments do not

enjoy the same tax treatment as those funded or formed by state and local governments. This

disparity makes it difficult for tribal nations to form charities and leverage tribal resources to

raise charitable donations from outside donors.

• Tribal Child Support Enforcement Agencies: Like state agencies, tribal child support

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enforcement agencies should have access to federal parent locator services and the ability to

garnish federal tax returns to enforce past due child support obligations.

• Indian Adoption Tax Credit: Families that adopt special needs children in tribal court are

currently ineligible for tax benefits available to families that adopt special needs children in state

court. Federal tax policy should treat tribal court orders the same as state court orders for

purposes of classifying an adoptive child as “special needs.”

• Excise Taxes: Tribal governments are not treated the same as state and local governments for a

variety of excise tax exemptions, which diverts resources from government services for tribal

citizens. Tribal nations should be treated the same as states for purposes of exemption from

federal excise taxes.

Provide Tax Incentive Parity for Indian Health Service Health Professionals: Indian Health Service

(IHS) health professionals are ineligible for recruitment and retention tax incentives available to other

public sector health professionals. IHS should have the same recruitment and retention tax incentives as

other public sector health systems.

Exempt Tribal Distributions for Tribal Youth: Due to a flaw in the Tax Code, distributions from minors’

trust funds established by tribal governments are subject to taxation at the rate of a minor’s parents,

resulting in an unintended disincentive to attend college. Correcting this would provide fairness to

Native youth and families receiving benefits from tribal funds.

Simplify, Expand, and Make Permanent the Indian Employment Tax Credit: Simplifying, expanding, and

making permanent the Indian Employment Tax Credit would increase its deployment, thereby

promoting economic growth and job creation in Indian Country.

Increase New Markets Tax Credits (NMTC) Deployment in Indian Country: Increasing deployment of

NMTCs for projects in Indian Country through a set-aside or other incentives would spur investment in

infrastructure, promote economic development, and create jobs in tribal communities.

Increase Low-Income Housing Tax Credits (LIHTC) Deployment in Indian Country: Congress should

treat tribal nations as states for LIHTC allocations, establish a tribal set-aside, and adjust the Tax Code

to increase deployment of the tax credits in Indian Country. The LIHTC program could provide much

needed private investment in affordable housing in tribal communities.

Legislative Update

Tax Fairness for Tribal Youth Act – H.R. 2810: On May 16, Representative Gwen Moore (D-WI)

introduced H.R. 2810, the Tax Fairness for Native Youth Act. The bill would amend the Tax Code to

treat certain payments made by tribal governments as earned income for tribal youth, correcting a flaw

in the Tax Code that subjects distributions from minors’ trust funds established by tribal governments to

taxation at the rate of a minor’s parents. This bill would correct the “Kiddie Tax issue.” H.R. 2810 has

bipartisan support from 20 co-sponsors and was referred to the House Committee on Ways and Means

for consideration.

Tribal Tax and Investment Reform Act – H.R. 2484: On May 2, Representative Ron Kind (D-WI)

introduced H.R. 2484, the Tribal Tax and Investment Reform Act. This bill would amend the Internal

Revenue Code of 1986 to address many of the inequities in the tax code for tribal nations. The bill

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would repeal the essential government functions test and allow tribal nations to issue tax-exempt bonds

on the same basis as states, allow tribal governments to operate a single pension plan for all their

employees, enhance tax parity for tribal foundations and charities, provide tribal governments access to

the Federal Parent Locator Service, and recognize tribal court determinations of “special needs” status

for purposes of Adoption Tax Credits. H.R. 2484 has been referred to the House Committee on Ways

and Means, and the House Committee on Education and Labor.

Making Permanent the Accelerated Depreciation Tax Credit – S. 1216: On April 11, Senator James

Inhofe (R-OK) introduced S. 1216, a bill to amend the Internal Revenue Code of 1986 to permanently

extend the depreciation rules for property used predominantly within an Indian reservation. The bill

would make the Accelerated Depreciation Tax Credit permanent, which expired in December 2017. S.

1216 has been referred to the Senate Committee on Finance.

Making Permanent the Indian Employment Credit – H.R. 2017: On April 1, Representative Tom

O’Halleran (D-AZ) introduced H.R. 2017 to amend the Internal Revenue Code of 1986 to make

permanent the Indian employment credit. This bill permanently extends the tax credit for Indian

employment, which expired in December 2017. H.R. 2017 was referred to the House Committee on

Ways and Means.

Tax Extender and Disaster Relief Act – S. 617: On February 28, Senator Chuck Grassley (R-IA)

introduced S. 617, the Tax Extender and Disaster Relief Act of 2019. This bill would extend expired

Indian Country tax extenders to December 2019. Tax credits that would be extended include the Indian

Employment Credit, Production Credit for Indian Coal Facilities, and the Accelerated Depreciation for

Business Property on Indian Reservation. The bill has been placed on the Senate Legislative Calendar

under General Orders.

Tribal Adoption Parity Act – S. 305 & H.R. 2497: On January 31, Senator Amy Klobuchar (D-MN)

introduced S. 305, the Tribal Adoption Parity Act. This bill would allow tribal governments to determine

whether a child has special needs for the purposes of the adoption tax credit, enhancing parity between

state governments and tribal nations. On May 2, Representative Derek Kilmer (D-WA) introduced

companion legislation in the House of Representatives. S. 305 was referred to the Senate Committee on

Finance, and H.R. 2497 was referred to the House Committee on Ways and Means.

Tribal Tax Priorities on Capitol Hill Post Tax Reform: NCAI membership has emphasized the

importance of reforming federal tax policy for Indian Country by passing NCAI Resolution #MOH-17-

011, “Equitable Treatment for Tribal Nations in Congressional Tax Reform,” at the 2017 Mid Year

Conference in Connecticut. Despite ongoing efforts by tribal nations, NCAI, and other organizations,

Congress did not include these tribal tax priorities in the tax reform legislation that passed in December

2017. NCAI continues to work with tribal leaders, tribal organizations, and members of Congress to

advocate for tribal tax parity, increased deployment of NMTCs and LIHTCs in Indian Country,

reauthorization and enhancement of tribal tax extenders, and the inclusion of tribal nations in new

programs.

Administrative Update

First Convening of TTAC: On June 5, the U.S. Department of the Treasury issued a notice for the first

meeting of the Treasury Tribal Advisory Committee (TTAC) scheduled for June 20, 2019. TTAC was

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created by the Tribal General Welfare Exclusion Act of 2014 (P.L. 113-168). During this meeting, the seven members of TTAC will be introduced and will appoint co-chairs, review the TTAC’s Charter and mandate, and discuss various federal income tax issues relating to tribal nations. In addition, TTAC will identify other topics of interest for 2019 and take other actions necessary to fulfill TTAC’s mandate. In 2016, NCAI passed Resolution #SPO-16-045 calling for the U.S. Department of the Treasury to set the initial meeting of TTAC to begin working to fully implement the Tribal General Welfare Exclusion Act. In accordance with this resolution, NCAI looks forward to the first meeting of TTAC, and its work in ensuring that relevant programs and policies are efficient, accessible, and developed in consultation with tribal nations and their communities. Opportunity Zones: Opportunity Zones were created through the Tax Cuts and Jobs Act of 2017 to encourage long-term investments in low-income communities across the United States. An Opportunity Zone is an economically-distressed area where new investments, under certain conditions, may be eligible for preferential tax treatment. On April 17, the U.S. Department of the Treasury issued a notice of proposed rulemaking that clarified proposed regulations and published guidance, as well as supported greater tribal inclusion for purposes of the tax incentive. The IRS indicated it will schedule a tribal consultation to obtain additional input on the proposed changes to these sections and to determine whether any additional guidance may be needed regarding leasing tribal trust lands and any other tribal implications of the proposed regulations. Address the Harms of Dual Taxation in Indian Country: NCAI continues to urge swift action to address dual taxation in Indian Country. State taxation of economic activities in Indian Country reduces tribal revenues necessary for tribal government services and infrastructure development, creates uncertainty for businesses on tribal lands, and suppresses economic activity that benefits tribal nations and surrounding communities. Statutory authority for the Indian Trader Regulations (25 U.S.C. § 262) is broad and authorizes flexibility to the Department of the Interior (DOI) to adopt new regulations that would meet the economic development and tax revenue needs of tribal governments in the 21st Century. We urge DOI to replace the current regulations, in accordance with NCAI Resolution #DEN-18-018, “Urging the Department of the Interior to Restart its Process of Updating the ‘Licensed Indian Trader’ Regulations and to Seek Congressional Legislation Preventing State Dual Taxation of Indian Commerce and Energy Development.”

TRIBAL LABOR SOVEREIGNTY ACT

The National Labor Relations Act (NLRA) was enacted in 1935 to address growing upheavals in private industry. The NLRA regulates labor relations between employees and private employers. The Act was never designed to regulate government employment, and all governments were exempted from the Act, although the NLRA did not specifically list out every type of exempted government (e.g., the District of Columbia or tribal nations). Over many years, the National Labor Relations Board (NLRB) consistently interpreted the government exemption to include the District of Columbia and tribal governments. But in 2004, the NLRB did an about-face and, without consulting tribal nations or writing new regulations, the NLRB declared that Congress intended the Act to apply to tribal governments after all. This interpretation of the law is diametrically opposed to Congress’ stated intention to exempt all governments. Overnight, tribal governments became the only governments to be subject to the NLRA. Over 90,000 other units of government, who employ over 21 million Americans, are not subject to the NLRA.

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Tribal nations are sovereign governments. There is no good reason to treat tribal governments

differently than other governments under the NLRA. Federal law should ensure tribal government

employers have the same opportunities as all other governmental employers to regulate labor with their

government workforces.

Despite years of advocacy and education by tribal leaders and NCAI, Congress failed to pass the Tribal

Labor Sovereignty Act (TLSA) during the 115th Congress, which would have provided tribal

government employers the same exemption from the NLRA that all other government employers

already enjoy. While a majority of the Senate voted in favor of TLSA, the tally fell short of the 60 votes

needed to end debate.

Although this result is very disappointing, we must continue to push Congress to pass TLSA. NCAI is

committed to continue educating members of Congress and advocating alongside tribal leaders and other

partners to pass this legislation.

On January 24, 2019, Senator Jerry Moran (R-KS) and Representative John Moolenaar (R-MI)

reintroduced TLSA (S. 226 & H.R. 779) in the Senate and House of Representatives. The Senate

Committee on Indian Affairs passed S. 226 at a business meeting on January 29, 2019, and the bill

awaits further consideration by the full Senate. H.R. 779 has been referred to the House Committee on

Education and Labor.

ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT

Tribal nations and Native entrepreneurs are building strong economies and investing in their

communities by developing Native-owned businesses, providing the tools and resources their people

need to pursue economic opportunities, and implementing innovative approaches that are tailored to

their unique needs. However, many barriers continue to undermine tribal nations’ abilities to improve

their economies and promote tribal entrepreneurship. Inter-agency cooperation, enhanced tribal

consultation, regulatory changes that incorporate tribal priorities, and increased access to economic

development and entrepreneurial support resources are crucial to ensuring such barriers are addressed in

Indian Country.

Legislative Update

Last Congress, there were several tribal economic development bills that would provide opportunities

for tribal nations and Native entrepreneurs to invest in their communities. Unfortunately, these bills did

not pass the House despite passing the Senate. So far, four bills have been introduced in the 116th

Congress that would provide similar opportunities in Indian Country. In accordance with NCAI

resolutions #MOH-17-049, “Calling for Enactment of the Indian Community Economic Enhancement

Act,” and #MKE-17-023, “Calling for Enactment of the Native American Business Incubators Program

Act,” NCAI continues to urge Congress to pass the following bills that would increase opportunities for

tribal nations to grow their economies.

The Indian Community Economic Enhancement Act – S. 212 & H.R. 1937: On January 24, 2019,

Senator John Hoeven (R-ND) introduced the Indian Community Economic Enhancement Act (S. 212),

which promotes tribal economic development by amending the Buy Indian Act; the Native American

Programs Act of 1974; and the Native American Business Development, Trade Promotion, and Tourism

Act of 2000. These long-sought programmatic changes would elevate the Office of Native American

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Business Development to the Office of the Secretary of Commerce, expand the Buy Indian Act, and

reauthorize and expand economic development initiatives. The bill would also require interagency

cooperation to promote private investment in Indian Country and update securities regulations to

provide tribal nations market access for debt and equity securities. S. 212 was passed by the Senate

Committee on Indian Affairs on January 29, 2019 and was placed on the Senate Legislative Calendar

under General Orders on April 8.

On March 27, Representative Norma Torres (D-CA) introduced H.R. 1937, the Indian Community

Economic Enhancement Act of 2019, which is a companion bill to S. 212. H.R. 1937 was referred to the

Subcommittee for Indigenous Peoples of the United States for consideration.

The Native American Business Incubators Program – S. 294 & H.R. 1900: On January 31, 2019, Senator

Tom Udall (D-NM) introduced the Native American Business Incubators Program. The bill would

establish a grant program in the DOI Office of Indian Energy and Economic Development to create

sustainable business incubators that provide collaborative workspace, skills training, and support

resources designed to meet the unique needs of Native entrepreneurs developing businesses in Indian

Country. The bill also leverages existing resources by requiring interagency coordination and

partnerships between business incubators and academic institutions. S. 294 was passed by the Senate

Committee of Indian Affairs and was placed on the Senate Legislative Calendar on April 8.

On March 27, Representative Deb Haaland (D-NM) introduced H.R. 1900, the Native American

Business Incubators Program Act, which is a companion bill to S. 294. H.R. 1900 was referred to the

Subcommittee for Indigenous Peoples of the United States for consideration.

WORKFORCE DEVELOPMENT

Workforce development success in Indian Country depends on the ability of tribal nations, Native

organizations, and Tribal Colleges and Universities (TCUs) to craft innovative solutions designed for the

particular capacity building needs of their tribal communities. To that end, the appropriate role of the

federal government is not to uniformly impose a standard set of answers to tribal workforce

development challenges nationwide. Instead, its job is to provide tribal nations, Native organizations,

and TCUs with the governance freedom, programmatic flexibility, training and technical assistance, and

resources that they need to design and implement bold strategies capable of advancing the workforce

development priorities of the specific tribal communities that they serve. The federal government must

work closely with tribal communities to identify and address obstacles that currently obstruct tribal

innovation and create new opportunities for tribal ingenuity to flourish. The federal government must

endow its systems, programs, and funding protocols with the ease and adaptability that tribal nations

need to effectively build their human capacity in accordance with their cultural values and in furtherance

of their community and economic development goals. As one longtime tribal workforce development

expert explains, “It’s about letting tribes be tribes, and doing things in a tribal way.”

In June 2018, NCAI launched its Workforce Development Toolkit for tribal leaders and key decision-

makers to serve as an informative guide as they engage in strategic deliberations on how best to develop

and strengthen workforce development initiatives in their communities.

http://www.ncai.org/ptg/WDEV_TOOLKIT.pdf

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Legislative Update

Elevate Act of 2019 – S. 136: On January 15, 2019, Senator Ron Wyden (D-OR) introduced S. 136 to

amend the Social Security Act to establish a new employment, training, and supportive service program

for the long-term unemployed and individuals with barriers to employment. Tribal nations (or intertribal

consortiums with a tribal family assistance plan approved under section 412) would be eligible for grant

funds and technical assistance for programming. S. 136 was referred to the Senate Committee on

Finance for consideration.

Amend Section 166 of Workforce Innovation and Opportunity Act (WIOA): Congress should pass three

amendments to the current language in Section 166 of WIOA to enhance Native-led workforce

development efforts:

1. Revise the language in section 166(h)(1) to ensure that the performance indicators and standards

applicable to Section 166 programs are standards specifically appropriate to that program;

2. Remove the application of the performance accountability provisions in Section 116 from all

funds provided to implement the Native American Programs in Section 116 and use the metrics

and standards developed specifically for these programs in consultation with the Native

American Employment and Training Council in accordance with Section 166(h); and,

3. Expand Subsection 166(i)(6) to enable tribal nations or other grantees receiving formula funds

from any state under the adult, youth, and/or dislocated worker programs to negotiate an

agreement with the state and the Secretary that provides for the utilization of the funds involved

under the terms applicable to Section 166 programs.

Administrative Update

DOI releases Interagency MOA on 477 Workforce Development Law: On December 20, 2018, DOI

announced the completion and signing of an interagency memorandum of agreement (MOA) between

12 federal agencies governing their participation in the federal government’s 477 program supporting

tribal workforce development efforts. The MOA implements the Indian Employment, Training and

Related Service Consolidation Act of 2017 (P.L. 115-93), which expands and makes permanent the

highly successful 477 program, which was established in 1992.

Unfortunately, the MOA contains several grave flaws that prevent the federal government’s full and

proper implementation of the 2017 law, notably: (1) restricting the types of agency programs eligible for

inclusion in a 477 plan by limiting program purposes and funding types beyond the limitations set by

P.L. 115-93, (2) transferring decision-making authority over program eligibility from the Secretary of

the Interior to other agencies, (3) giving individual agencies the authority to delay 477 plan reviews

through multiple time extensions, and (4) allowing agencies to deny waiver requests for reasons not

authorized by P.L. 115-93.

NCAI continues to work with the 477 Tribal Work Group and tribal nations to compel the 12 named

agencies and the White House Domestic Policy Council to develop and ratify technical amendments that

would bring the interagency MOA into full compliance with P.L. 115-93.

Department of Labor (DOL) Indian and Native American Section 166 Programs: The Administration’s

FY 2020 budget proposes to eliminate funding for DOL’s Indian and Native American (INA) Section

166 programs and in its place create Native adult set-aside funds within WIOA’S State Adult formula

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grant program, which will undoubtedly lead to a drastic reduction in funding available to tribal 166

grantees. This change was proposed without regard to existing statutory language and without

consultation with tribal nations or coordination with the National Native American Employment &

Training Council (NAETC). NCAI and NAETC request that:

1. INA Programs continue to be administered and funded as required by existing law; and

2. DOL honor the government-to-government relationship between tribal nations and the U.S. by

engaging tribal nations and tribal experts before developing new policy proposals that would

affect workforce development initiatives in tribal communities.

NCAI further calls on DOL to triple the staff of its Division of Indian and Native American Programs

(DINAP). Increasing the staff size of DINAP from five to no less than 14 positions will ensure adequate

technical assistance and support for WIOA Section 166 grantees. Lastly, NCAI calls on DOL to change

the structure of the NAETC to allow Council members who “term out” to remain on the Council until

their replacements are nominated, selected, and seated so that the Council can continue its vital work

uninterrupted.

The American Indian Population and Labor Force Report is Long Overdue: This report, which DOI is

required by statute to produce every two years, was last produced for the year 2013. The next report is

now four years overdue. This report is an important tool for assessing the current state of the Native

workforce and crafting solutions to expand and strengthen it. For the next report to provide substantive

value to tribal nations, Native organizations, and TCUs, its development must involve tribal leaders and

data experts. It should also be informed by workforce and occupational data generated by tribal

researchers, and the federal government should provide technical expertise and financial resources for

them to perform the work. This data should be geared towards measuring the distinct job market needs

in Indian County and illustrating the particular socio-economic conditions that specifically impact

Native people.

economic & workforce development

Documents