LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington, Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6971 NOTE PREPARED: Jan 12, 2022
BILL NUMBER: SB 373 BILL AMENDED:
SUBJECT: Lake County Convention and Entertainment District.
FIRST AUTHOR: Sen. Charbonneau BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED: X GENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: The bill establishes the Lake County Convention and Entertainment District Fund.
It specifies permissible uses for money in the fund. It provides that the Northwest Indiana Regional
Development Authority (NWIRDA) administers the fund. It requires the licensed owner of a riverboat
operating in Vigo County to pay 0.5% of the riverboat's adjusted gross receipts (AGR) in a year to the
NWIRDA for deposit in the fund for 10 years.
The bill allows the Lake County fiscal body to adopt an increase in the county Innkeeper's Tax. It provides
that part of the revenue from an increase in the County Innkeeper's Tax must be deposited in the fund.
The bill authorizes the city of Gary to impose a Food and Beverage Tax on transactions occurring in a
specified area. It specifies the distribution of the revenue from the Food and Beverage Tax.
The bill allows the Lake County legislative body to adopt an ordinance establishing a convention and
entertainment district development area (tax area). It requires the legislative body to make findings when
adopting an ordinance. It requires the legislative body to submit an ordinance establishing a tax area to the
Budget Committee and Budget Agency for review and approval. It allows a tax area to receive incremental
State and Local Income Tax revenue and incremental Sales Tax revenue attributable to the tax area. It
provides that the revenue attributable to the tax area must be deposited in the fund. It limits the amount of
incremental tax revenue that may be allocated to $8 M per year. It provides that a tax area terminates not later
than 20 years after incremental tax revenues are first allocated to the tax area.
It changes the population parameters to reflect the population count determined under the 2020 decennial
census.
SB 373 1 Effective Date: July 1, 2022.
Summary of NET Impact: The following table shows the net impact for FY 2023 to FY 2025.
Net State and Local Impact ($ in Millions)
Source of Impact Funds FY 2023 FY 2024 FY 2025
Individual Income Tax Capture State General Fund ($1.3) - ($1.5) ($1.4) - ($1.6) ($1.5) - ($1.7)
Sales Tax Capture State General Fund (1.0) - (1.9) (1.1) - (2.1) (1.2) - (2.3)
Total State General Fund (2.3) - (3.4) (2.5) - (3.7) (2.7) - (4.0)
Individual Income Tax Capture
Lake County
Convention and
Entertainment District
Fund (LCCED)
1.3 - 1.5 1.4 - 1.6 1.5 - 1.7
Sales Tax Capture LCCED Fund 1.0 - 1.9 1.1 - 2.1 1.2 - 2.3
Local Income Tax Capture LCCED Fund 0.7 - 0.8 0.7 - 0.8 0.7 - 0.8
Vigo County Casino AGR to GaryLCCED Fund 0.5 - 0.6 0.5 - 0.6 0.5 - 0.6
Food and Beverage Tax LCCED Fund 0.1 - 0.2 0.2 - 0.4 0.2 - 0.4
Innkeeper’s Tax LCCED Fund 0.5 - 0.6 0.9 - 1.2 0.9 - 1.2
Total LCCED Fund 4.1 - 5.6 4.8 - 6.7 5.0 - 7.0
Innkeeper’s Tax Lake Co. Treasurer 0.5 - 0.6 0.9 - 1.2 0.9 - 1.2
Explanation of State Expenditures: Department of State Revenue(DOR): The DOR would be required to
calculate the incremental revenues as provided in the bill. The DOR will also incur additional expenses to
revise tax forms, instructions, and computer programs to reflect the changes made by the bill. The DOR's
current level of resources should be sufficient to implement these changes.
State Budget Agency (SBA)and Budget Committee: The Budget Agency and the Budget Committee must
review and approve the ordinance before the Income Tax incremental amount and the Sales Tax incremental
amount may be allocated to the tax area. These are within routine duties of SBA and the Budget Committee.
Explanation of State Revenues: Convention and Entertainment District Development Area: The tax area
would capture the incremental State Individual Income Tax and Sales Tax. [The district would also capture
incremental local income tax.] It sets FY 2021 as the base year for purpose of calculating the incremental
state and local tax revenues. The tax area defined in the bill includes the new Gary inland casino that started
operations in May 2021. Since the Gary casino moved to its current location toward the end of the fiscal year,
it is estimated that the base year will only include a very small portion of the annual economic activity at the
casino. It is estimated that the incremental revenues in the tax area will include substantial portion of income
and sales tax collected from activities at the Gary casino. The area also includes home improvement stores,
restaurants, convenience stores, gas stations etc. It provides for the transfer of the captured incremental
revenues generated in a district to the Lake County Convention and Entertainment District Fund. The
analysis assumes that the capture will begin to be allocated starting in FY 2023.
SB 373 2 The bill requires that before October 1 of each year, the DOR shall calculate the incremental state and local taxes
for the preceding state fiscal year for the tax area. The incremental taxes allocated to the tax district will be
deposited in the Incremental Tax Financing Fund. The incremental taxes deposited in the fund include Sales
Tax, Individual Income Tax, and local income tax. The aggregate amount of revenues that is deposited in the
fund may not exceed $8 M per state fiscal year. The Incremental Tax Financing Fund is estimated to receive
about $2.3 M to $3.4 M in FY 2023, $2.5 M to $3.7 M in FY 2024, and $2.7 to $4.0 M in FY 2025. It will also
receive local income tax revenues of about $0.7 M to $0.8 M annually. The bill allows the capture to continue
for up to 20 years.
The money in the Incremental Tax Financing Fund is transferred to the Lake County Convention and
Entertainment District Fund.
The Individual Income Tax captured by the districts will reduce revenue to the General Fund. The Sale Tax
revenue is deposited in the General Fund (99.838%), Commuter Rail Fund, (0.131%) and Industrial Rail
Service Fund (0.031%). Captured Sales Tax revenue will reduce deposits to these funds. The reduction will
depend on the economic activities of the taxpayers in those districts in FY 2021 related to economic activities
in FY 2022 and thereafter.
Explanation of Local Expenditures: Convention and Entertainment District Development Area: The bill
defines a "tax area" as a geographic area established as a convention and entertainment district development
area. It allows Lake County legislative body to establish a convention and entertainment district development
area that includes a facility or complex of facilities allowed under the bill. It defines the location of the tax
area. It requires that the tax area must be initially established by ordinance. An ordinance establishing a tax
area must provide for the allocation of the captured incremental revenue to a tax area. It requires that the
legislative body shall submit the ordinance to the Budget Committee for review. If approved, the tax area
may exist for up to 20 years after the income tax incremental amount or gross retail incremental amount is
first allocated to the tax area.
Lake County Convention and Entertainment District Fund: The Lake County Convention and Entertainment
District Fund is administered by the NWIRDA. It outlines the purposes for which the money in the fund may
be used. The purposes include the financing of capital projects, construction, improvement, and operations
related to a convention or entertainment related facility in Gary. It provides that money remaining after fulfilling
these purposes shall be paid to the Lake County Parks and Recreation Department to be used for the operation
and maintenance costs of the capital improvement.
Explanation of Local Revenues: Lake County Convention and Entertainment District Fund: The nonreverting
fund is established to receive the following funding source established in the bill: (1) Vigo County Casino AGR
to Gary, (2) a portion of the additional Innkeeper’s Tax in Lake County, (3) Gary Food & Beverage Tax, (4)
Money transferred to the fund from the Incremental Tax Financing Fund, (5) Any other appropriation, gift, other
deposits or transfers into the fund. The fund is estimated to receive about $4.1 M to $5.6 M in FY 2023, $4.8
M to $6.7 M in FY 2024, and $5.0 to $7.0 M in FY 2025.
Vigo County Casino AGR to Gary: The bill will result in payments of about $500,000 to $575,000 annually
from the licensed owner of the Vigo County casino to the city of Gary. The payment will be made for 10
years starting likely in 2023 and ending in 2032. HEA 1015-2019 provided guidelines for the Indiana
Gaming Commission (IGC) to accept applications for awarding a license to operate a Vigo County casino.
In November 2019, Vigo county voters approved permitting a casino in Vigo county. IGC continues to
evaluate proposals to build a casino in Vigo county. It is estimated that the approval process could result in
SB 373 3 Vigo County casino opening in the year 2023 or later.
Innkeeper’s Tax in Lake County: This bill changes the maximum innkeeper's tax rate that may be imposed
by the Lake County council from 5% to 8%. It provides that the increase of 3% in the innkeeper’s tax
imposed under the bill will remain in effect unless the increase is rescinded. The increase applies to
transactions after the last day of the month in which the county fiscal body adopts an ordinance. The
provision is effective July 1, 2022.
It is estimated that the additional rate will result in about $1.8 M to $2.4 M annually. The Lake County
Convention and Entertainment District Fund will receive about 50% of that revenue annually. The remaining
50% will be distributed to the county treasurer. It requires that if there are no obligations are owed from the
Lake County Convention and Entertainment District Fund, the portion of the revenue transferred to
NWIRDA shall be paid to the city of Gary to be used for public safety purposes.
[The estimates assume only six months of revenue will be collected in FY2023, and the estimate does not
account for any hotels built in the future in Lake County.]
Food and Beverage Tax in Gary: The fiscal body of Gary may adopt an ordinance to impose a 1% Food or
Beverage Tax on transactions in an area in Gary as described in the bill. A tax imposed under this bill is in
addition to any Lake County Food & Beverage tax. The first $1 M of revenue received from the Food &
Beverage Tax imposed under the bill in each year would be deposited in the Lake County Convention and
Entertainment District Fund. Revenue that exceeds $1 M will be distributed to the city of Gary to be used
for public safety purposes. It is estimated that the tax will result in about $0.2 M to $0.4 M annually. [The
estimates assume only six months of revenue will be collected in FY 2023.]
Local Income Tax: The incremental local income taxes deposited in the Lake County Convention and
Entertainment District Fund could reduce the certified distributions of local income tax. It will also likely
reduce the frequency and amount of supplemental distributions. LIT revenues captured by the tax area will
be about $0.7 M to $0.8 M annually starting in FY 2023.
State Agencies Affected: Department of State Revenue; State Budget Agency.
Local Agencies Affected: Lake County Units; Northwest Indiana Regional Development Authority
(NWIRDA).
Information Sources: Legislative Services Agency, Indiana Handbook of Taxes, Revenues, and
Appropriations, FY 2021; OFMA Income Tax Database.
Fiscal Analyst: Randhir Jha, 317-232-9556.
SB 373 4