The Indiana House passed a bill requiring the city of Gary to pay more than $12 million to East Chicago and Michigan City, which means the bill needs Senate approval before reaching Gov. Mike Braun’s desk.
House Bill 1448 – authored by Rep. Hal Slager, R-Schererville – addresses a state comptroller’s mistake with supplemental payments that were added into state law during the 2019 session.
Ahead of Thursday’s vote, Slager said the bill works to fix “a misalignment of gaming revenue that was altered for four years through the movement of a gaming license and a hold harmless agreement.”
“We’ve got to get this straightened out and give the comptroller the authority to get that taken care of. This is a compromise solution,” Slager said.
The bill passed 89-2, with Rep. Ragen Hatcher, D-Gary, and Rep. Ryan Dvorak, D-South Bend, voting against it.
Hatcher was unable to immediately respond to a request for comment Thursday.
Funds were sent to Gary that should have been distributed to East Chicago and Michigan City to ease the financial burden following the move of the Majestic Star casinos to Hard Rock Casino Northern Indiana, located along Interstate 80/94, according to Post-Tribune archives.
Gary owes East Chicago more than $6.4 million and Michigan City more than $5.7 million, according to bill documents.
Slager, on Wednesday, proposed an amendment to House Bill 1448, which passed the House in the bill’s second reading.
Both cities might receive compensation for any missing funds during the 2025 fiscal year, according to the amendment.
Hammond was also included in the amendment, saying the city could receive payments if it is also missing funds during the 2025 fiscal year.
Hammond Mayor Tom McDermott previously told the Post-Tribune that since Hard Rock Casino opened, Horseshoe in Hammond has lost about $15-20 million each year. The city’s yearly revenue is about $130 million, he added.
Hammond was included in the 2019 bill that awarded supplemental payments.
“We’ve had to adjust on the fly, but life would be a lot easier if we had the revenue that we had originally,” McDermott said. “No doubt about it, there was a transfer of wealth from those cities to Gary.”
Slager’s amendment also says that the state comptroller can deduct $166,666.67 from Gary to make the supplemental payments. The comptroller cannot deduct more than $2 million in a fiscal year.
Money for supplemental payments will come from the deducted amount and money appropriated by the Indiana General Assembly for making the payments, according to the amendment.
Before the amendment, House Bill 1448 included a three-year plan for Gary’s payments.
For the fiscal year beginning July 1, 2025, approximately $1.4 million should be paid to Michigan City for the funds not paid in fiscal year 2021, according to the bill.
Starting in fiscal year 2026, approximately $2.9 million should be paid to East Chicago and approximately $2.2 million should be paid to Michigan City for funds not paid in fiscal year 2022, according to the bill.
For fiscal year 2027, approximately $3.6 million should be paid to East Chicago and approximately $2.2 million to Michigan City for funds not paid in fiscal year 2023, according to the bill.
Gary officials have repeatedly expressed concerns about House Bill 1448 and how it will impact the city’s finances. When the bill was announced, Gary Mayor Eddie Melton released a statement saying he was shocked at the dramatic impact it would have on the city.
Melton believes Gary shouldn’t have to pay anything in 2025, his statement said.
“I worked closely with my administration and the Gary Common Council to pass a 2025 budget crafted to the needs of Gary citizens,” Melton’s statement said. “For this bill to be brought up at the last minute to address this egregious oversight is unjust.”
mwilkins@chicagotribune.com
