State of Indiana officials are scrambling to respond after missing payments to the cities of East Chicago and Michigan City to the tune of $20 million – and overpaying the city of Gary – in the wake of years-old casino legislation.
At issue is whether Gary’s tax revenue should be affected as a result of the state comptroller office’s mistake.
State lawmakers years ago passed a law requiring the state to take tax dollars previously directed to Gary and send it to other Indiana cities between 2022 and 2025 after allowing two casinos to move from along Lake Michigan in Gary in to a new location along Interstate 94.
The payments, approved after intense negotiation in a landmark gaming bill that eventually sparked a corruption case against then-state Rep. Sean Eberhart, were meant to offset potential economic impact from the move, which was championed by gaming company Spectacle Entertainment.
However, those deficiency payments were never sent, state officials acknowledged Wednesday. Instead, the money was incorrectly given to Gary, which incorporated it into the city’s budget.
“The state comptroller never triggered those payments,” said state Rep. Greg Porter, D-Indianapolis. “Now we’re scrambling to get these communities close to $20 million.”
State Comptroller Elise Nieshalla said she was working on the issue. The office did not say why the payments, which were supposed to begin when former Comptroller Tera Klutz was in office, were never made.
State Comptroller Elise Nieshalla speaks at the state GOP Convention, Indiana Farmer’s Coliseum, Indianapolis, Saturday, June 18, 2022, during her run for treasurer.
“East Chicago and Michigan City are owed monies,” a spokesperson from the comptroller’s office said. “Gary was overpaid.”
In order to remedy the mistake, Rep. Hal Slager, R-Schererville, has filed legislation this year that requires making those missed payments over the next three years.
“Rep. Slager’s bill extends the time for these payments an additional three fiscal years, so that payments can be made from Gary’s wagering tax revenue to East Chicago and Michigan City,” the comptroller’s office said.
However, Porter said the city of Gary shouldn’t be on the hook to pay those cities $20 million, when the city’s annual budget is only $66 million to begin with.
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That would amount to effectively “slashing” Gary’s budget, Porter said, and called for the state to facilitate a multi-year, no-interest loan.
“Why shortchange our cities when the state didn’t do its job?” Porter said in the statement.
Michigan City Mayor Angie Nelson Deutch told IndyStar in a statement that “we look forward to working through the process with the state and the legislature in resolving this issue.”
“We also want to make sure that the city of Gary is provided some additional resources to assist in the repayment of the funds, since this wasn’t their error,” Nelson Deutch said.
City of Gary officials did not immediately reply to IndyStar’s request for comment.
Contact senior government accountability reporter Hayleigh Colombo at hcolombo@indystar.com or follow her on X at @hayleighcolombo.
This article originally appeared on Indianapolis Star: State comptroller error means Gary’s budget could be slashed $20M