Kootenai County and the Coeur d'Alene Tribe are weighing a state official's objection to whether they can create an agreement over how the county collects dollars on reservation property.
For more than a year, the two entities have been pursuing a memorandum of understanding in which the county would pledge support for the Tribe placing its land into a federal trust, allowing the Tribe sovereignty over the property.
The key issue: that the county can't collect taxes on trust land.
"We think there's a way to find a win-win," said tribal spokesman Helo Hancock.
But a recent MOU draft has garnered concern from Carl Olsson, deputy attorney general assigned to the Idaho State Tax Commission.
Olsson has objected to a provision in which the Tribe would make payments in lieu of taxes on property in fee status, or reservation land that the government had previously given away and the Tribe reacquired, which "is arguably taxable," Hancock said.
Such an agreement wouldn't be valid, Olsson has informed the county.
"They're saying that the county does not have authority to enter into an agreement that has payment-in-lieu-of-taxes," said Commissioner Todd Tondee.
Under the draft agreement, the county would no longer impose property taxes on reservation land in fee status that is owned by the Tribe or its members.
The Tribe would instead make payments to the county, its cities and taxing districts, equal to the taxes that otherwise would have been collected.
"In some ways, it's kind of a reimbursement," Hancock said.
The county would also agree to "not issue comments in opposition, appeal or otherwise oppose applications made by the Tribe" to put fee lands into a trust.
Every year of the agreement, the MOU states, the Tribe would make payments on all the Tribe's fee property in the county.
The amount of the payments is still being negotiated, Hancock said.
There are currently no plans, he added, for payments to include the Tribe's financial support to educational programs and schools, mandated by a gaming compact with the state.
"That hasn't been discussed," he said.
Olsson said he was concerned after learning the MOU's particulars in an email exchange with Assessor Mike McDowell.
"My concerns about it were conceptual," Olsson said, adding that he hasn't reviewed the MOU.
According to Olsson, if property is in a taxable state, like the Tribe's fee status land, the county doesn't have the authority to accept payments in lieu of taxes on it.
"The county really doesn't have the power under the constitution to say, 'We're not going to collect those taxes, we'll just enter into this MOU,'" Olsson said.
He believes the MOU would be justified, he added, if it is used to clear up a dispute over a property's tax status.
"If this is used as a mechanism to resolve that dispute, this might be a good idea," Olsson said.
The Tribe's legal representatives are reviewing Olsson's opinion, Hancock said.
"That may be one of the terms that needs to be negotiated," he said. "There is no intent on either side to do it in a way that would compromise any constitutional provision."
The county's legal department is also looking into the matter, Tondee said.
Regardless of the outcome, he still favors continuing negotiations on the MOU, he said.
"It's within their right to ask," he said of the Tribe's efforts to enter land in a trust.
Currently, the Tribe has applied through the federal government to put roughly 1,200 acres - about a third of its county property - into a federal trust.
"It restores our ancestral homeland," Hancock said, adding that the Tribe has been buying back reservation property the government gave away a century back.
The acreage in the application is worth about $26,000 in property taxes, he added.
The Tribe does not need county support to gain federal approval for a land trust.
But the entity has sought an MOU with the county since the previous commissioners appealed trust status on 140 acres of tribal land last year, Hancock said.
"I think any time the feds see that the Tribe and the county are getting along on these issues, it's helpful," Hancock said.