Minnesota’s governor, Tim Pawlenty, has become something of a poster child for antitax Republicans. He has even been declared presidential material by such conservative lights as Paul Weyrich. Besides being young and quite good-looking in an aw-shucks sort of way, he won election in 2002 on a no-new-taxes pledge, and he’s sticking to it–with predictable results. Most notably, Minnesota public schools have taken a dive, a development that probably cost the GOP dearly in the November election, when it lost thirteen seats in the Minnesota House.

It’s clear that pressure to fund the public sector in this traditionally progressive state, where Democrats control the Senate and nearly regained the House in 2004, is getting dangerously high from Pawlenty’s viewpoint. He would like to salvage the situation with gambling money. Bucking both the state GOP platform and his own earlier declarations of principle, he’s been pushing hard for an expansion of Indian gaming, with the state taking a cut of the proceeds.

Variations of this scenario are being played out around the country. Tribal casino revenues last year were about $18.5 billion, according to the National Indian Gaming Association, and Indian gambling is an increasingly tempting target for cash-strapped states and municipalities. In California, Governor Arnold Schwarzenegger is counting on it to help close the state’s projected $8 billion budget shortfall.

In Minnesota eleven tribes run eighteen casinos. All are on reservation land, with the tribes getting all the profits. A few Dakota (also known as Sioux) bands located an easy bus or car ride from the Twin Cities have prospered, but others, notably three bands of northern Ojibwe, or Chippewa–including those at Red Lake, where the recent school shooting occurred–don’t do as well.

Minnesota legislators are now trying to write a two-year state budget but are finding themselves about $470 million short. Last year’s early iteration of the Pawlenty proposal had Red Lake and the two other northern Ojibwe bands running new Twin Cities casinos in exchange for providing an up-front payment and a continuing revenue stream worth $350 million. Ojibwe tribes were essentially being invited to encroach on a Dakota franchise. The proposal brought charges of divide-and-conquer tactics. For some, it evoked enmities that go way back: Red Lake, according to some accounts, got its name after Ojibwe warriors killed so many Dakota during a battle there that the water turned red.

But the proposal did get support from some progressives, including State Senator Sandy Pappas, probably one of Minnesota’s most progressive officeholders. Gambling, she argues, is destined to expand in any case, and she’d like to see an arrangement that benefits the neediest tribes as well as the state. It’s been a hard sell. “The Senate Democratic caucus doesn’t want to use gambling to balance the budget,” she says. “They want to force the governor to raise taxes. I understand that. Personally, I think we need both.”

Some powerful Republican interest groups also don’t want to use gambling to balance the budget. They include, as one would expect, the religious right. And the Taxpayers League of Minnesota–headed by David Strom, who in recent years has been as close to a kingmaker as this state produces, and a big Pawlenty booster–has also come out strongly against.

With just weeks left before the end of the current session, Pawlenty moved to a Plan B, which would put two casinos–one run by the state and one run by tribes–at the existing suburban Twin Cities racetrack. This plan was dealt a blow when only one of the three northern tribes, White Earth, signed on.

John McCarthy, executive director of the Minnesota Indian Gaming Association, says Pawlenty has few choices to balance the budget. “It’s either raise taxes or come up with some additional money,” he says, noting that the Democratic caucus “is holding pretty firm” against a gambling deal. And, he observes, in other states–Florida, New York and California among them–Republicans are experiencing variations on Pawlenty’s dilemma. “They are not gambling-prone, but they are also not tax-prone, and this seems to be the lesser of the two evils.”

The National Indian Gaming Association doesn’t take a position on deals with the states, except that they must be “fair and equitable,” according to chairman Ernie Stevens Jr. But in a recent speech he addressed the tax-versus-gambling issue directly. Whatever the states’ difficulties, he said, “tribal governments did not create these problems–and tribal governments shouldn’t be looked to as a way out.”