Squeeze on cities could choke Northwest Indiana Regional Development Authority

BY KEITH BENMAN, Times of Northwest Indiana
kbenman@nwitimes.com

Cities scrambling to plug budget gaps could make the Northwest Indiana Regional Development Authority wait longer for its money this year and next.

Already, contributing cities have often been late with quarterly payments, as has Porter County on at least one occasion, RDA Executive Director Tim Sanders said.

For mayors, the math has been simple, Hammond Mayor Thomas McDermott Jr. said.

"The RDA has $43 million in the bank," said McDermott. "So it's hard to feel sorry for the RDA when they ask for our $3.5 million when our employees aren't getting paid."

Hammond's last contribution -- along with those of other municipalities -- have swelled the RDA's treasury to $52.5 million since McDermott last took stock.

Lake County cities use casino money to make RDA payments. Porter County uses a local option income tax.

Late notices for the most recent quarterly payment of $875,000 already went out to Gary, Hammond, and East Chicago, Sanders said.

He said the RDA knows mayors are facing difficult times. State mandated tax caps are forcing Hammond to reduce its 2009 budget by $3.5 million, East Chicago by $18 million and Gary by $47 million.

Gary Mayor Rudy Clay has raised the specter of bankruptcy as a real possibility for his city of 100,000. That would put its payments to the RDA in question.

Further clouding the picture is Majestic Star Casinos LLC withholding the $6 million per year it contributes to the city for economic development in a dispute over an access road.

The casino company still makes regular tax payments to the state, some of which come back to the city.

Clay did not respond to repeated requests for interviews.

State Rep. Chet Dobis, D-Merrillville, said cities must keep making payments to the RDA under state law. He said the tax caps were the work of voters, not legislators.

And he offered a warning to cities that consider not fulfilling statutory obligations to contribute.

"There's nothing to say that $3.5 million is a magical number," Dobis said. "It can go up."