CHEYENNE - The Northern Arapaho Tribe offered Gov. Dave Freudenthal a trade-off of sorts Tuesday: It would reconsider paying its share of the cost of a tribal liaison in return for the governor's support of a tax deal to give the tribe more money.

The tax credit would go to oil and gas companies that pay state severance taxes on production on the Wind River Indian Reservation. Then the tribe, instead of the state, would levy the same amount of tax against the oil and gas companies, said Mark Howell, public affairs consultant for the tribe.

There would be no negative impact on the companies or production, he said.

The amount of tax the tribe could levy is open to negotiation with the governor and the Legislature, Howell said in a telephone interview Tuesday afternoon. Companies that produce oil and gas on the reservation now pay both state and tribal severance taxes.

"We understand there may not be total tax equity here," Howell said. "But we're looking for some amount of money that would be available back to the tribe for governmental and social purposes."

Poverty and unemployment on the Wind River reservation has exceeded 60 percent for decades, Burton Hutchinson, chairman of the Northern Arapaho Business Council, said in a release.

The tribe has argued for years that the state collects more in taxes from the reservation than it delivers in services there. The state severance tax on reservation production has been a particular target of tribal ire: The state can't tax the tribes' oil and gas interests directly, but state severance and ad valorem taxes apply to the resource when it's in the hands of non-Indian companies.

The tribe on Monday released a study by a consulting firm, Charles River and Associates of Oakland, Calif., detailing the difference between the revenue collected by the state and Fremont County and spending by the state and county from 1979 through 2002.

During that period, severance and sales tax revenue going to the state from the reservation has been an average of $3.5 million per year more than the tribe received in services from the state, Howell said.

With recent high oil prices, the differential will be even greater this year, he said.

"This historic tax disparity is not of your making, but your administration has an opportunity to correct it," Hutchinson's letter to Freudenthal said.

The letter was mailed to the governor on Monday, Howell said. But Freudenthal had not received the letter by Tuesday afternoon and would not comment on the request until he did, said his press secretary, Lara Azar.

In the letter, Hutchinson said the tribe would reconsider its financial support for the governor's tribal relations liaison if he committed to help pass the legislation authorizing the tax credit.

Last month the governor terminated the tribal liaison position, held by Ivan Posey, effective at the end of October because the Northern Arapaho Tribe refused to pay its share of the $100,000 annual cost of the position.

The Northern Arapaho and Shoshone tribes were to pay $50,000 per year each for the position, which had been authorized by the 2003 Legislature. The state was to pay the other $50,000.

Triggering the split was a disagreement between the state and the Arapaho tribe over language in a Department of Family Services contract for child protective services, foster care and juvenile probation on the reservation. The contract said any disputes would be handled in state court, a provision the tribe said violated its sovereignty.

Shoshone tribal officials said they were willing to pay their share for the governor's tribal liaison, Azar said Tuesday.

The collapse of the liaison agreement was "sad," Howell said.

"The governor chose to take a certain position with social services," he said. "We're not looking to resurrect that issue."

Although the Shoshone tribe participated in the consultants' tax study, the Arapaho tribe is making the tax credit request of the governor "on our own," Howell said.

"I suspect they will be interested," he said, referring to the Shoshone tribe.

Shoshone tribal officials could not be reached for comment Tuesday afternoon.

Capital bureau reporter Joan Barron can be reached at (307) 632-1244 or at joan.barron@casperstartribune.net.