INDIANAPOLIS | Public oversight legislation inspired by a pair of scandal-clouded Lake County development firms is dead for the year, lawmakers said Thursday.

Disgusted by corruption that toppled the Gary Urban Enterprise Association, state Sen. Frank Mrvan, D-Hammond, put his efforts behind Senate Bill 246, which would require annual audits of quasi-governmental entities that receive public money.

The measure, which also would've forced mayors in East Chicago and Gary and city council members in Hammond to disclose millions in riverboat casino dollars they spend each year, cleared the Senate 47-0 last month.

But state House Public Policy Chairman Trent Van Haaften, D-Mount Vernon, said the legislation needs substantial revisions that his committee doesn't have time for this year.

"He said it's too sweeping, it's going to affect too many people," Mrvan said. "As long as they're using public money, they should be able to answer how they spend it. I don't think it's far reaching to have transparency and know where the money's going."

Word of the legislation's demise came on the same day that state Attorney General Steve Carter filed a lawsuit to open the books of East Chicago Second Century, a development firm that reaped $16 million in riverboat casino cash under a deal brokered by former Mayor Robert Pastrick.

In an investigation last year, Carter could document only 61 low-income apartments, 32 homes and a dozen townhouses built during the decade Second Century drew casino dollars.

"A lot of people don't know about this transaction," Carter said. "They will start to find out about it, and many legislators are going to start to say, 'How could this kind of thing go on?' They will find out we need better disclosure."

Carter called the demise of Mrvan's audit measure "unfortunate." The Indiana Gaming Commission also lobbied for the legislation, which would've given the agency greater control over similar local casino development pacts across the state.

But a number of smaller economic development groups, as well as some municipalities, thought the audits were too intrusive or could disrupt existing contracts, Van Haaften said. His committee won't take up SB 246 when it meets for a final time next week.

"It is unfortunate, especially with the East Chicago issue. That is an issue we need to address," Van Haaften said. "I will continue to work on that over the summer."

Staff writer Bill Dolan contributed to this report