The Indiana General Assembly approved another piece of the funding puzzle for the proposed extension of the South Shore commuter rail line before its session adjourned Thursday.

Under the bill, an estimated $4 million annually will be returned to communities that have gambling by closing a tax loophole that people with significant investment income in Lake County can qualify for — even though it was designed to aid low-income homeowners.

The amended Senate Bill 367 directs the money to be given to the Northwest Indiana Regional Development Authority “to establish or improve public mass transportation systems in Lake County.” The bill passed 73-24 in the House and 47-1 in the Senate.

Bill Hanna, chief executive of the authority, said the funds will be put in escrow to operate the rail extension, which could start running as early as 2023. The escrow fund would have about $36 million by that point, Hanna said.

“It’s a critical piece,” he said. “We are raising capital locally for the construction portion, but without guaranteeing operations funding for five years, you can’t make an application for federal matching funds.”

It would cost an estimated $10 million annually to run the South Shore’s proposed eight-mile West Lake Corridor, which would have stops in Hammond, Munster and Dyer.

Local leaders have until March 31 — the deadline to submit the project for the Federal Transit Administration’s New Starts program — to raise half of the funds for the estimated $571 million project. So far, commitments from the RDA, Lake County, Munster and other municipalities have brought it within $5.5 million of their goal.

U.S. Rep. Pete Visclosky, D-1st, headlined a Monday event with local leaders to push them to get the word out about the project. Visclosky has been a longtime supporter and has been active in lobbying local officials to commit a portion of their county economic development income tax monies.

Hanna said he thinks the momentum for the project is strong as people recognize the economic advantages to linking Northwest Indiana more closely with Chicago.

“We’ve talked about it for a long time, but now people are talking very seriously about better access for jobs and recognizing the importance of the project,” he said. “We’ve got 18 days left, but there are still a lot of discussions going on.”

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