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50 Years Ago: $16.29 leads to lawsuit against AZ over taxes

The cartoon on the editorial page of the Navajo Times 50 years ago said it all. It showed a federal judge standing over an elderly Navajo woman shouting, “Very expensive $16.29. Should have left well enough alone.”

That was the money Rosalind McClanahan had taken out of her pay in 1968 by her employer, First Navajo Bank of Window Rock, for her state taxes that year. That was roughly 30 cents a week. The problem was that she did not feel the state of Arizona should have taken the money and attorneys for DNA-People’s Legal Services, the legal aid agency on the reservation, agreed.

They used her as a plaintiff in a lawsuit they filed against the Arizona Tax Commission, arguing that as a resident of the reservation, she was exempt from paying state taxes. Today, that’s a non-question since the tribe won that argument more than 40 years ago. But in 1969, it was a controversial issue, with DNA losing the first round when a superior court judge in St. Johns ruled, 50 years ago this week, in favor of the state.

Judge D.L. Greer ruled that the state deserved collecting taxes because of all the money it spent on services to the tribe and reservation residents. “I am of the opinion,” he said, “that the state is assuming a great deal of the burden of educating and taking care of Indians. If they are not subject to the tax, I think the state will be reluctant to spend additional funds on the reservation.”

Ted Mitchell (yes, that Ted Mitchell), head of DNA, was McClanahan’s attorney and he argued that the reservation is a political institution separate from the state. “The Navajo Tribe budgets about $15 million a year to run its own police department, courts, executive and legislative branches and three administration divisions,” he said.

He said this money primarily comes from royalties the tribe receives from natural resources on the reservation but this is finite and someday the tribe will have to find something to replace that revenue. For most Navajos, the money taken out of their paychecks was less than 50 cents per week but DNA and the tribe spent tens of thousands of dollars fighting against the practice on the basis of tribal sovereignty and the reluctance to have the state assume any authority over what went on within the reservation lands.

In other news that week, Navajo Tribal Chairman Raymond Nakai announced an agreement with Hanover Modular Homes International, a Texas firm, which, he said, was going to build a plant in Fort Defiance to manufacture mobile homes.

Nakai made a big deal of the announcement, holding a press conference which also included, for the first and last time during his administration, breakfast rolls for the press that showed up. The few reporters who showed up for the event expressed surprise because Nakai had never in the past showed any kind of concern for the wellbeing of the press. It was later learned that officials for the company had purchased two dozen rolls for the press but by the time reporters arrived, most of the rolls had been eaten by Nakai and his staff. Still, he took credit for thinking of the press.

The plant would have a basic production area of 52,000 square feet, the Times reported, and would manufacture everything from small mobile homes of one bedroom in size to three and four bedrooms. What was unique about the idea, however, was that all of the homes manufactured by the plant would stay on the reservation to meet the enormous need of the Navajo people for decent housing. The first group was slated to go to the Shiprock Agency, Nakai said, probably in the spring of 1970. What is even better, he said, is that the homes would be ready for occupancy immediately. They could be installed in one day.

The company would be supplying the materials needed to build the mobile homes but the tribe, using state and federal grants, would be responsible for providing the plant and the workforce.

Everyone was amazed at how the project was being fast-tracked with the first delivery of homes set to come off the assembly line in just seven months. Nakai wanted to have photos of the first homes being delivered to their sites during the peak of his campaign for re-election. The only problem was that it never happened.

The plant never became a reality for some reason and no homes were built. This would become a regular issue during election season throughout the 70s and 80s. Leaders of the tribe would announce major economic development projects as the election season heated up and once the election season was over, the project would never be mentioned again.

Peter MacDonald made use of this practice a lot, not only announcing new businesses being established on the reservation but new initiatives that would bring more services to reservation residents. It got to the point that area reporters grew skeptical about any kind of announcement that was issued by anyone during election season because very few actually happened and many of those that did didn’t last very long.

About The Author

Bill Donovan

Bill Donovan has been writing about the Navajo Nation government since 1971 and for the Navajo Times since 1976. He is currently semi-retired and is living in Torrance, California, and continues to report for the Navajo Times.