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Senate debates Navajo Nation tax measures aimed at boosting motel development; sponsors promise five‑year review
Summary
Senate sponsors said two bills (SB 22 and SB 114) are intended to spur hotel/motel expansion and jobs on the Navajo Reservation by adjusting fuel and sales taxation arrangements; debate centered on who pays for roads and how the Legislature will judge the exemption in five years.
Senators debated two related measures intended to encourage economic development on the Navajo Reservation and to resolve double‑taxation concerns for tribal enterprises.
Senator Dimitrich introduced Senate Bill 22 to allow a voluntary increase in the Navajo Nation’s motor and special fuel levies that would align local charges with state fuel tax practices. He said the change is largely voluntary for the tribe and the state would receive an estimated positive fiscal impact of about $70,000. Senators asked whether the increased revenue would be dedicated to reservation roads; Dimitrich said the 6¢ increment would come to the state rather than directly to tribal roads and explained the state retains responsibility for state highways on the reservation.
First substitute Senate Bill 114 removes the state sales‑tax portion from the transient room (motel) tax for tribal public accommodations to reduce double taxation and encourage expansion of lodging. Sponsors argued the change could support the creation of new motel rooms and jobs — one speaker said a single job on the reservation supports multiple household members — and that the measure includes a five‑year review. Senator Valentine pressed the sponsor on the criteria the interim committee should use to decide whether to continue the exemption after review; the sponsor said the committee should evaluate whether the exemption demonstrably created jobs and reduced unemployment on the reservation.
Senator Bramble said the five‑year review is an improvement over many tax incentives because it creates objective standards to judge whether the policy actually improved economic development. Sponsors repeatedly emphasized the bills are economic development tools and that a review clause provides a means to repeal the exemption if it does not perform as intended.
Both measures were advanced to the third‑reading calendar: SB 22 passed to third reading (25 aye votes, 4 absent) and the first substitute for SB 114 passed to the third‑reading calendar later with recorded support (27 aye votes, 2 absent).
