(WSBT) Millions of dollars have poured in to New Buffalo's Four Winds Casino since it opened three months ago. Two percent of the money generated by slot machines at the casino is supposed to go to local governments and school districts in Berrien County.

But now, the Tribe who owns the casino says it won't pay because the board overseeing the payments isn't playing by the rules.

The first portions of the expected $3 million of this year's payments were supposed to go out this week, but instead the Pokagon Band of Potawatomi Indians has placed the money in an interest bearing escrow account.

It was supposed to be the first "big payday" -- the sounds of success fueling growth for cities, towns, townships, community colleges and school districts across Berrien County.

But for now, it's all on hold after the Tribal Council sent a letter late last week telling members of the Local Revenue Sharing Board who are charged with distributing the money according to the gaming compact between the State of Michigan and the Pokagon Band, that the board itself was set up illegally.

"They wrote their bylaws before they even formed the board itself," said Tribal spokesman Tom Shields. "Then they made sure the third party -- in this case the [New Buffalo School District] -- in order to join, they were forced to agree with those bylaws without any say in them."

And Shields says that third seat has no power to change the bylaws because the board's two permanent members -- New Buffalo Township and Berrien County -- hold the majority vote.

But those two permanent members say that's not true, and they feel ambushed.

"We're very disappointed, and the allegations are not true," said New Buffalo Township Clerk Rolland Oselka. "We were given no prior notice, and feel these concerns are being brought up at the last minute. This is a direct violation of the compact."

Berrien County Commissioner Larry Clymer agreed, but went a step further in a news release Tuesday.

"The band has a legal obligation to discharge the funds," he wrote. "Failure to do so is a violation of the licensing requirements for continued casino operations."

But New Buffalo Area Schools Superintendent Dr. Mike Lindley says a state review of exactly where the money is going is long overdue.

"We actually applaud their efforts in taking a bold step to say we need to resolve these issues to make sure the compact is enforced as it was negotiated with the state and the tribe," he said. "And despite some people saying there was no advanced warning, we know the City of New Buffalo has raised concerns. We've raised concerns. The Tribe and the state have raised concerns. Lake Michigan College and the Berrien County Intermediate School District has raised concerns."

Dr. Lindley also says he has problems with the board's bylaws, and despite the fact that the district has asked for them to be re-written, he says the "third member" of the board is powerless to do anything about them.

"It's as if they created a third class citizen of the third member, who's not a permanent membership of the two parties," he said.

The City of New Buffalo voiced similar concerns in the fall after being left off a permanent seat on the revenue board.

Mayor Bob Westergren said he was very pleased the board was going under state review.

"I think this is long overdue," he said. "It's clear they didn't follow the compact, and it's clear the city is the most impacted [by the casino]. "I hope this opens the door to include us."

The sole purpose of the Local Revenue Sharing Board is to distribute the money raised through the two percent revenue sharing agreement contained in the compact, and he says the board is attempting to alter those payouts without the Tribe's or the state's consent.

"It's illegal. They can't do it. And that's what's happened," he said.

Dr. Lindley says New Buffalo Schools have not spent any of their share yet. But others have, including paychecks for five Berrien County sheriff's deputies, assigned to patrol the area around the casino. For now Sheriff Paul Bailey says there are no plans to lay them off, or alter their patrols.

But some worry if the differences aren't ironed out soon, the deputies won't be the only ones caught in the crossfire.

"It's a matter of how soon [they address this], and how much blood there is in the process," Lindley said.

Shields says the Pokagon Band is working with attorneys in the Michigan Governor's office to address the issues quickly, but neither side expects a resolution by the end of the year.

Lindley says he hopes it doesn't become a legal battle, but worries further delays could lead to lawsuits.

County Commissioners plan to talk about their next move at a meeting December 10.

To read the letter the Pokagon Band sent to the revenue sharing board, click on the link in the Related Content box.