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Economic Woes Pinch Navajo Families

Navajo Times, commentary, Bill Donovan Posted: Jan 01, 2009

WINDOW ROCK, Az. - The top story of 2008 for many people on the Navajo Reservation may have been the economy.

It was the top story throughout America as the national economy tanked, banks foreclosed on hundreds of thousands of wobbly mortgages, and CEOs of failing companies used federal bailout money to pay themselves bonuses.

This led to a crisis of confidence, including dismal Christmas spending by shoppers and the sharpest decline in the stock market since the Great Depression in the 1930s. Hundreds of thousands of people were laid off by companies that were trying to stave off bankruptcy.

The credit crunch - where even people with good credit histories could no longer get loans - was barely felt on the Navajo Reservation, where few people have mortgages. By the end of the year, however, reservation families who were in the market for a car began feeling the crunch.

Border town car dealers were saying by November that they were having the worst year ever with some dealers reporting sales down 40 percent or more.

Part of this was due to people postponing large purchases because of pay-cut or layoff fears, but a lot also had to do with credit drying up. It became almost impossible to get a bank loan for many people who had no problems in the past.

Early in the year, gas prices soar to their highest rate ever, with some gas stations on the reservation charging more than $5 a gallon. Food and hay prices followed suit, and by summer, Navajos were saying that the high gas prices were changing their shopping habits, forcing them to stay home more and do more of their shopping in area stores. Many families cut their visits to border communities by half or more as the gas prices soared.

Gas prices on the reservation are anywhere from 20 cents to more than a dollar higher than the prices charged off the reservation. Gas station owners said the differences is due to transportation costs and said that they were being affected as well because their profit per gallon stayed the same while sales volume was declining as Navajos chose to stay home.

For the Navajo Nation, however, the increase in gasoline prices was money in the bank because royalties on oil and gas soared, bringing in an extra $20 million or so to the tribal coffers.

But just as quickly as oil prices rose, they started to fall as the world fell into recession and demand began to slow everywhere.

Retail prices on the rez dropped to below $2.00 a gallon, and food bills also leveled off, but the joy was short-lived as tribal employees - who make up the largest employed group on the reservation - began to hear chatter about a shortfall in tribal revenues that pay their salaries.

Vice President Ben Shelly warned program directors they would have to defend the federal grant money they depend on, and noted that the portion of the tribal budget funded by tribal revenues is now looking at major shortfalls.

Shelly said this may be the biggest problem facing the tribal government as the new year approaches. Referring to the impact on royalty income, he said, "We were doing good when the price for a barrel of oil was between $130 and $140. It's now at a $36-a-barrel level."

The state governments in Arizona and New Mexico are cutting back on grants in an effort to keep their budgets afloat and the Navajo Nation is looking at cutbacks in tribal programs to keep from going into the red.

"We're going to make sure that services to the people are not affected," Shelly vowed, adding that every tribal program will be required to look deeply within its budget to determine where savings can be made.

This means that areas like travel and equipment purchases will be seeing major cuts.

One ray of sunshine in all of this is the fact that the Navajos will be looking at a new U.S. president taking charge Jan. 20.

The Navajo Nation, both its government and its people, went heavily for Barack Obama and he has already made good on his first promise, to appoint a Native American advisor who will be in the White House, close at hand to consult on all issues affecting Indian Country.

It's not a guarantee of more money, but it's a big change in attitude.

Both Shelly and President Joe Shirley Jr., along with some 42 other tribal officials and council delegates, are expected to attend Obama's inauguration in Washington, D.C.

Related Articles:

Salazar Tapped as Interior Secretary

Navajo Times on the Border and Overseas

Navajo Nation Endorses Obama

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