South Carolina’s tax collection agency is ordering Richland County to repay nearly $32.5 million it says was misspent from a special fund designated for road and transportation projects.
But some county leaders are ready to fight those findings. They could instead continue their years-long court battle with the state Department of Revenue over how to manage the billion-dollar Transportation Penny Tax Program.
The state Department of Revenue sent county leaders a written report late last week detailing its findings from a five-year audit of the fund, which voters approved in a 2012 referendum as a means of paving, expanding and repairing the county’s roads and bridges.
The report highlighted a trove of expenses the Revenue Department contends the transportation fund shouldn’t cover. They include nearly $20 million in duplicative pay and fees for project managers, nearly $1 million in public relations work, $800,000 in legal fees and $89,000 for a mentorship program.
The audit also found the agency paid $17 million for less than $11 million worth of mitigation credits, which are necessary for developing in wetlands areas. The county then used some of those credits for non-transportation projects, such as the new China Jushi fiberglass plant on Shop Road.
The Revenue Department insists the county pay those costs instead, making the transportation fund whole again.
The audit examined the program’s spending through May 2018, but the Revenue Department isn’t finished. Last week, it requested more county financial documents so it can review the program's spending through May.
The Revenue Department’s recent findings, released to Richland County in a July 30 letter, leave county leaders with a choice: Cough up the money or fight the findings in court.
Richland County Council Chairman Paul Livingston will advocate for pushing back in court, he told The Post and Courier on Monday. Livingston defended the program’s spending, saying many of the costs are necessary for administering a 20-year, billion-dollar program.
Livingston said Richland County modeled its penny tax program after counterparts in Charleston, Beaufort and York counties. He wonders why the Revenue Department isn’t targeting those programs, as well.
The agency declined to comment on Monday.
Livingston also noted that paying the $32.5 million would require dipping into the county’s main spending fund, another pot of taxpayer money. That means county residents would end up paying twice — once at the cash register in the form of a 1 percent sales tax and again on their property tax bill.
“We just want to make sure the taxpayers of Richland County get a fair deal when it comes to this and not have to pay any more taxes than they should pay,” Livingston said. “I’m committed to making sure everything is done fairly. Richland County should be treated just like any other county.”
The county council vote probably won’t be unanimous.
Richland County Councilman Joe Walker said the county needs to address the problems identified by the Revenue Department.
“It’s up to us on Council to take responsibility for this issue and take responsibility for fixing the problem,” Walker wrote in a statement Monday. “If a house is on fire, you put it out. You don’t argue and point fingers at who started the blaze. How we got here doesn’t matter at this point. Fixing the problem and moving forward is what matters now.”
Richland County and the Revenue Department have been locked in a legal battle over the penny tax program for years.
The Revenue Department began auditing the penny tax program in 2015. But Richland County objected when the agency raised questions of improper spending and suggested Richland County adopt specific standards of how the money can be used.
The courts have prevented the Revenue Department from withholding tax money from the penny tax program, but they have sided with the agency in questioning some of the program’s spending.
The county has already paid back some $1.5 million into the penny tax program after the S.C. Supreme Court chastised the county for "many suspect expenditures," including money for the mentorship program, legal fees and public relations advise.
The penny tax program, which is expected to raise $1 billion before it expires in 2035, has already tackled some transportation projects.
That includes the creation of a plaza outside Colonial Life Arena in downtown Columbia and improvements on North Main Street and Hardscrabble Road in the northeast section of the county.
Joseph Cranney contributed to this report.