The Indiana Senate is adjusting the House-approved plan to fix a state comptroller’s error that mistakenly paid $12.2 million in extra gaming revenue to Gary over the past three years, while shorting East Chicago and Michigan City.
The Senate Appropriations Committee voted 13-0 Thursday to advance House Bill 1448 to the full Senate, but not before moving the start date for Gary to begin repaying the money — and the other cities to begin receiving it — to 2026 to avoid a major cut to the Steel City's current-year spending plan.
"We felt everybody's got their budget set. We don't want to interfere with anybody's budget. So we take Rep. Slager's bill and we just move the date out one year," said state Sen. Ryan Mishler, R-Mishawaka, the committee chairman.
Gary Mayor Eddie Melton told the panel it would be better for Gary and its residents if the state made the city's first-year repayment since the revenue distribution error was caused by the state.
But he said delaying it until next year at least gives city leaders time to prepare for the necessary budget changes rather than losing an estimated $6 million from its $66 million budget this year.
"I want to be clear, we support making sure that those communities are whole. So this is not an effort for us not to withhold any dollars from them. We want to stay true to whatever the legislation says. However, it would be a fiscal constraint for us if we were to pay this year," Melton said. "We want to make sure that we can operate as normal."
Michigan City Mayor Angie Nelson Deuitch said she understands the need for the one-year delay. But she also doesn't want to see it extended any further.
"For Michigan City, we just want what was legislated in a more timely manner," Nelson Deuitch said. "We just want some assurances that we're going to receive it within a certain time frame, whether that's 4 or 5 years, and knowing that, versus seeing it drag on."
Under the plan, Gary would have approximately eight years to return the additional money it received through no fault of its own, while East Chicago and Michigan City would get their money in just four years by having the state comptroller pre-pay a portion of the money Gary eventually will return.
State Rep. Hal Slager, R-Schererville, the sponsor, said the legislation ensures everyone ends up with the right amount of money without unduly harming Gary's finances in the short term or sticking Gary with a long-term loan.
The error stems from a provision tucked in House Enrolled Act 1015 (2019) that provided a "hold harmless" to East Chicago and Michigan City if their share of wagering tax revenue declined in the four years following the relocation of Gary's casino from Lake Michigan to a more advantageous site adjacent to the Borman Expressway at Burr Street.
The state comptroller's office acknowledged it failed to calculate and distribute the hold harmless payments until January, instead sending more money in 2022, 2023 and 2024 to Gary while shorting East Chicago by $6.5 million and Michigan City $5.7 million.