The advantages and potential limitations of each of these four alternatives are explored in the following section. Congress should rescind the 1988 amendments to the Indian Tax Status Act that undermined tribes' ability to issue tax-exempt bonds. Provisions were included in S. 211 in the 103rd Congress that would have repealed a series of onerous restrictions governing the issuance of bonds for development purposes by tribes. The federal government offers domestic firms that establish facilities in foreign countries up to 90 percent loan guarantees in order to protect them from the financial and political risk of operating outside the country. Similar assurances provided to private companies locating on reservations could provide the sense of security needed to stimulate additional private investment in Indian country.
Most cities routinely finance the development of their municipal infrastructure through such bonds.
But tribes do not have access to similar institutions and thus rarely turn to bonds as a means of supporting reservation economic growth. The resulting losses of federal revenues prompted Congress to dramatically reduce the availability of such instruments. Data are not available to establish the extent to which tribes and Indian interests share in the benefits of such bonds. However, informal conversations with some state officials suggest the incidence of issuance of private-activity bonds for purposes related to reservations or Indian businesses are rare. So far no one has cited a single case.