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A top Interior Department official said Monday that federal funding to settle the Seneca Indian Nation's lease negotiations with the City of Salamanca would not be budgeted until the State of New York agrees to help pay for such a settlement.

Eddie Frank Brown, assistant secretary for Indian affairs, said the Interior Department considers the Salamanca situation a "local concern. We want to see how the local officials and the state handle it" before considering federal funding for the settlement.

President Bush's proposed budget for fiscal 1991 does not include any funding for the Salamanca deal, Brown said in a budget briefing at the Interior Department. "We won't consider making that part of the budget before we see a proposal" for a settlement, he said, and such a proposal would have to include state money.

Both federal and state money are considered critical to solving the land-lease dilemma in Salamanca, a Cattaraugus County city built primarily on land owned by the Seneca Nation.

A century-old lease agreement on the land expires Feb. 19, 1991. Rep. Amory Houghton Jr., R-Corning, has been arranging meetings between the Seneca Nation and the Salamanca Lease Authority in an attempt to speed up lease negotiations that have been going on for 20 years.

The Buffalo News reported last month that the two sides are coming closer together on one major issue: an up-front payment to the Seneca Nation of about $50 million, which could include cash, land, tax breaks and economic aid. Houghton has said such a deal would have to be funded by the state and local governments.

Houghton said he had not expected money for Salamanca to be included in the Bush budget proposal. After hearing Brown's comments, Houghton said: "I've thought in the past that the state has tried to play down its role in this, but the federal government really did the original treaty. The federal government is the one that has to come to the table."

Terming Brown's comments "diversionary," Houghton said other Interior Department officials had been helpful in the Salamanca situation. Interior Secretary Manuel Lujan Jr. "has been very supportive," he said.

State officials had a mixed reaction to Brown's comments.

"At the staff level, we're working together," said Robert Batson, counsel in the state Office of Rural Affairs. "They'll say they want us" to commit to funding the settlement first, "and we'll say we want them to do it first, and what you'll probably end up seeing is that we do it simultaneously."

Batson said he has heard similar comments from federal officials for years. "It's probably the standard answer to questions about state and federal funding," he said.

Jeffrey Cohen, a program associate in Gov. Cuomo's office, said he was surprised to hear Brown's statements. Although the state has fiscal problems of its own, "I won't say that we won't make a commitment until the federal government does," he said.

The Interior Department budget proposal announced Monday includes $7.7 billion in funding -- 6 percent less than in fiscal 1990. Department Budget Director Anthony L. Itteilag said $139 million in the projected savings for 1991 would come in the areas of Bureau of Indian Affairs land and water-claims settlements.

An unusually large number of claims were settled in fiscal 1990, he said, "and we don't expect that to be repeated."

Told about the reduced funding for such settlements, Houghton said: "That doesn't sound that great. But I've been talking to people, and they know that something has to be done in this situation."

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