Wednesday, March 3, 2004 | 9:17 a.m.
ALLEGANY INDIAN RESERVATION, N.Y. -- Before New York ventured deep into gambling to help recoup losses from Sept. 11, there were long, tough talks with the Seneca Indian Nation.
The Senecas were at the fore again last month when Gov. George Pataki delayed -- for the second time -- collecting cigarette taxes from Indian merchants.
The Senecas are in Niagara Falls, where 90,000 people a week try their luck at the Seneca Niagara Casino -- and they are in cyberspace, dominating Internet cigarette sales.
With 7,200 members, Senecas are a tiny fraction of the state's 19 million people, but more and more the Indian nation's voice carries far from the forested hills of its three western New York reservations, affecting policy on issues including taxes, casinos, land claims, even sovereignty.
About as far from Albany and its imposing Capitol as any place in the state, the Seneca government is at home on the Allegany Reservation, a 20,000-acre swath rich with sand and gravel pits, farms and timber.
From a modest office complex named for a tribal elder, President Rickey Armstrong sees his people turning a corner, emerging from a decades-long economic low onto a new path toward prosperity. Within five years, he sees the nation realizing his dream of "self-determination, independence and self-sufficiency."
"Our options are endless," said Armstrong, elected to a two-year term in November 2002.
Lighting the way for now are the neon lights of the Seneca Niagara Casino, the nation's newest business venture which opened New Year's Eve 2002 and has exceeded all expectations. Shovels are in the ground on a second casino, in Salamanca, to open this spring, and a third casino, in Buffalo or nearby, is in the nation's future.
As part of the 2002 compact with the state allowing for the casinos, the Senecas last month sent Pataki a check for $38 million -- the state's 18 percent share of slot machine profits. The share will eventually grow to 25 percent.
While the casino rewards have not yet trickled in an obvious way to the 4,300 Senecas living on reservations -- trailer homes and unemployment still prevail -- there is no shortage of plans.
There are new scholarships and a burial fund for indigent members. Bigger payoffs will come in the form of a new dialysis treatment center and a housing program to be available by spring. A mortgage plan is crucial to getting Senecas into homes, Armstrong said, since banks traditionally deny loans to reservation dwellers because they cannot foreclose on land set aside for the nation in a 1794 treaty.
Meanwhile, the nation's payroll on its Allegany and Cattaraugus reservations is 1,025 and growing as offices and businesses expand, up from 838 a year ago. The nation's newest sovereign territory -- the casino in Niagara Falls -- employs 2,000, though not all are Senecas.
Not all Senecas have gone willingly into casino gambling. Some cite moral grounds, others oppose any deal with a state they distrust.
Gambling opponent Susan Abrams said agreeing to open the casino's books to New York as part of the revenue-sharing deal diminished the nation's sovereignty.
"Any time a tribal nation concedes issues of tribal sovereignty it is a loss," said Abrams, a former tribal councilor. "It is a loss for us today and for our future generations. I don't know if it can be undone."
Although New York state and the Seneca Nation have been cordial partners in the casino, the two have been at odds over the Senecas' other major business -- cigarette sales. Because their sovereign status frees them from the $1.50 per pack state sales tax, the Senecas sell hundreds of thousands of lower-priced cigarettes through the Internet and at reservation stores.
Late last year, the state banned Internet and mail-order cigarette sales, saying it was too easy for teens to order. The Senecas are challenging the ban in court. State officials also had proposed taxing cigarette and gasoline sales by Indian businesses to non-Indian customers -- a plan countered by the Senecas in statewide radio, television and newspaper ads that call it a violation of an 1842 treaty.
On Tuesday, Pataki's tax commissioner said the state will indefinitely delay the start of collections of state taxes on most sales by Indian vendors to give the administration more time to negotiate with tribes over taxes and other issues.
"We've been battling tax issues every two years for decades," said Armstrong, who praised the decision to delay collections.
Armstrong makes it clear that while Senecas are willing to listen, he will not accept any taxation or have Seneca businesses raise their prices to level the playing field for non-Indian competitors, who complain they are at an unfair disadvantage.
"If we were to raise our prices we would lose the competitive edge. We may as well just close up," the president said.
Pataki must walk a fine line. More than once, the U.S. government has intervened on the tribe's behalf against New York -- including when the Senecas unsuccessfully claimed ownership of populous Grand Island and other islands in the Niagara River, and in renegotiating an expired lease that allows the city of Salamanca to exist on the Allegany Reservation.
The Senecas also have taken matters into their own hands, sometimes with violent results. In 1992 and 1997, Seneca Indians blocked the state Thruway and the Southern Tier Expressway with burning cars, tires and other debris in protest of earlier efforts to collect taxes on reservation sales.
When Tax Commissioner Andrew Eristoff announced the delay in tax collections, he said: "I'm extremely concerned about the possibility of violence. It's a huge concern for any New Yorker. ... I think it would give anyone pause."
A Pataki spokesman said the 2002 casino compact shows what can be achieved through good-faith negotiations.
"While differences remain and negotiations with the Senecas and other tribes are very complex, the governor believes we must continue the path of cooperation and avoid confrontation," spokesman Todd Alhart said.
"It's not even the money," said Armstrong of the taxation debate. "It's the right to be tax exempt that was guaranteed us in the treaties ... A lot of the Senecas are not business people, but they'll fight for that right to be tax-exempt."
Which brings Armstrong to his biggest concern for his people: survival. He has seen other tribes disappear into the general culture and is determined to retain the Seneca identity.
To that end, the Senecas are stepping up efforts to preserve their language and culture, including opening the "total immersion" Faithkeeper's School, at which students use their Seneca names, cook traditional foods and learn ceremonial addresses in the native language. At the Seneca-Iroquois National Museum in Salamanca, senior tour guide Jeremy Jones also is a willing teacher.
"We want people to know who we are," he said, "what our history is and what we've gone through -- and to let people know we're still here."
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