The state would end millions of dollars in annual payments to communities that have casinos under legislation the Senate Appropriations Committee approved Thursday.

But those local governments would still keep millions more from tax payments and local agreements with the gambling operators.

The phased-in change would save the state $24 million in 2015 and another $48 million each year thereafter—all money that’s now being collected from gambling taxes and sent to cities, towns and counties.

The state would then use much of that cash to offer a new tax credit to casinos to encourage them to renovate and rebuild to better deal with competition from casinos in Oho, Illinois and Michigan.

Senate Appropriations Chairman Luke Kenley, R-Noblesville, said he wants to have the “local units share in the commitment” to help the casinos thrive.

Senate Bill 528 would reverse a policy the General Assembly approved a decade ago that capped the revenues that local communities collect from wagering and admissions taxes but also guaranteed they’d never receive less than the amounts they collected in 2002.

Kenley said the state made that promise when riverboat tax revenue was at one of its highest levels and lawmakers believed it would continue to grow. But recently, an economic downturn and competition from other states has depressed those revenues, and the state is consistently paying out some of its gambling taxes to local governments to make good on the guarantees.

On Thursday, the Appropriations Committee voted to end the payments as part of a larger bill that aims to help shore up the casino industry and the taxes it pays to the state. Kenley said the payments change is an effort to “rectify something that appears to be getting out of hand.”

“We need to get them in line with whatever the activity [at the casino] is,” he said.

But Sen. Earline Rogers, D-Gary, said she’s concerned because the two Majestic Star casinos in Gary are now in bankruptcy and are unlikely to produce much revenue or take advantage of a tax credit that would help them renovate or rebuild.

“For our city to be losing I guess what would be $5.5 million at this point in time, that trade-off doesn’t work. That balance doesn’t work,” she said. “We might want to look at exempting cases where there’s a bankruptcy situation.”

In some communities, the losses could be mitigated somewhat by other changes the bill makes to the casino tax structure.  Also, the bill would not affect local development agreements through which casinos make direct payments to communities and community organizations.

If passed into law, the bill—with all changes taken into account—would mean $4.4 million less in 2015 and $12.1 million less for the town of Lawrenceburg in Dearborn County where Hollywood Casino is located. But the community would still receive about $45 million in taxes and local payments from the casino.

For Harrison County—the home of Horseshoe Southern Indiana casino—the loss would be about $3.3 million in 2015 and $8.2 million in 2016. But the county would still receive $18.5 million in taxes and other payments.

For Evansville, home of Casino Aztar, the loss would be about $900,000 the first year and $2.5 million in the second. That will leave the community with $6.9 million in annual taxes and payments.

Eight other communities would also be affected by the changes.

The bill—which now moves to the full Senate for consideration—would also:

- Permit the state’s racetrack casinos to offer table games with live dealers. Currently, table games are available only electronically.

- Require Indiana Live in Shelby County to make payments for three years to the casino in French Lick. That’s to make up for business that could be lost when Indiana launches live table games.

- Eliminates the admissions tax paid each time a person goes through the turnstiles and increases the supplemental wagering tax to make up the revenue.

- Creates a tax credit of up to $40 million annually for casinos that invest in their properties.

- Reduces tax rates for the state’s lowest-revenue casinos.

- Permits the owners of the French Lick Resort & Casino to use money from a historic preservation fund for projects. Currently law allows only the use of the interest for projects.