Court ruling worth thousands in taxes to Ledyard

Ledyard Mayor John Rodolico figures the town is entitled to more than a half-million dollars in unpaid back taxes, interest and fees in the wake of an appellate court ruling affirming the town's right to tax Foxwoods Resort Casino slot machines leased by the Mashantucket Pequot Tribe.

What's more, Rodolico said Tuesday, the town's annual tax levy on all nontribal casino enterprises subject to such taxation could now exceed $300,000 a year.

"It's not a windfall; it's not like we just won a judgment," Rodolico said. "Really, it's about establishing the revenue stream the town requires to run its government. Over the years, we've budgeted this money.

"If we had lost this lawsuit, it would have been a loss for the past and for the future."

A three-member panel of the 2nd U.S. Circuit Court of Appeals issued the ruling Monday, reversing a district court decision in favor of the Mashantuckets, who contended federal laws bar state and local governments from taxing nontribal entities that do business on reservation lands.

The tribe maintained such taxation interfered with its sovereignty.

"The town and state have more at stake than the tribe," the appellate court wrote in its decision. "The economic effect of the tax on the tribe is negligible; its economic value to the town is not."

It could not be learned whether the tribe is considering appealing to the U.S. Supreme Court.

"We just received the decision yesterday and continue to review it," Bill Satti, a tribal spokesman, said Tuesday.

Rodolico said companies that lease personal property to the tribe owe the town $372,000 in back taxes, which they withheld while the 7-year-old suit was pending. Annual tax revenue from slot-machine leases alone comes to a little more than $100,000, the mayor said.

The Mohegan Tribe, which owns the Mohegan Sun casino, has watched the Foxwoods-Ledyard case with interest, as have Montville officials, according to Chuck Bunnell, the Mohegans' chief of staff.

He said the appellate court ruling would have little impact on the Mohegans, who all along have been paying slot-machine vendors for the local personal property taxes they incur. One Mohegan Sun slots vendor, however, has withheld taxes pending the outcome of the Foxwoods case, Theresa Hart, Montville's finance director, said.

"If you're going to lease machines out and there are expenses involved, like taxes, you're going to pass them on (to the lessee)," Bunnell said.

Montville Mayor Ronald McDaniel said the appellate court ruling would not cause the town to re-open negotiations with the tribe regarding taxable property. He said Mohegan Sun, under a memorandum of understanding between the tribe and the town, has agreed to pay taxes on nontribal personal property.

"We're pleased with the decision," he said.

Both the Mashantuckets and the Mohegans are planning to add shopping facilities to their casinos that would be owned by third-party entities leasing reservation property. Certain personal property owned by the tenants would be subject to local taxes, town officials said.

Such is the case with the casinos' non-tribally owned retail outlets and restaurants.

Day Staff Writer Kelly Catalfamo contributed to this report.

b.hallenbeck@theday.com

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