EXCLUSIVE: State auditing Richland County’s penny sales tax spending

State Department of Revenue officials said Thursday they are looking for possible conflicts of interest in how Richland County has been spending money raised by its transportation penny-on-the-dollar sales tax.

The ongoing audit, which DOR confirmed Thursday, is examining how the county has collected and begun to spend $100 million in taxpayer dollars since 2013, when the tax began.

The agency said its audit is far more extensive than any audit it has done of any county’s tax collections and will examine whether “expenditures are in accordance with state law.”

Department of Revenue April 15 letter informing Richland County of audit  

DOR will search for possible conflicts of interest between Richland County’s public officials, projects chosen by the county and who has received county contracts, agency officials said. They did not elaborate.

DOR director Rick Reames III and agency officials declined to say what prompted their audit, saying in an email, “It is the department’s policy to not comment on the specific factors or circumstances that prompt a review.”

Reames was not available Thursday to answer questions. However, Reames did say though a spokesman, “The public deserves oversight and transparency when it comes to their tax dollars. We will force that accountability whenever necessary.”

DOR did say that Richland County Administrator Tony McDonald and his staff had been aware of the audit since April 15 and are cooperating. State law gives DOR the authority to conduct such an audit.

McDonald could not be reached for comment, but County Council chairman Torrey Rush said he welcomed the audit.

“We don’t have anything to keep from the public,” Rush said Thursday evening through a spokeswoman. “We want to be as transparent as we can. That is what we are committed to doing, so the audit is another way for the public to be informed about how the dollars are being collected and spent.”

Council member Seth Rose said he had not known of DOR’s audit but approved of it. “An audit will make sure taxpayer dollars are spent appropriately.”

The tax passed in November 2012 after a bitterly fought taxpayer referendum that climaxed in an election marred by broken election machines, lines that lasted for hours, ballots that went missing and numerous other irregularities.

Hayes Mizell, a longtime county resident who is chairman of a 15-member citizens’ penny sales tax advisory committee, said he welcomes the audit.

“It is always good business to have a third-party audit,” Mizell said. “Citizens will be encouraged that there is an independent audit, but I think it needs to be clear that audits occur all the time as a routine matter in businesses and nonprofits. The fact that an audit is occurring does not mean there will be any finding of wrongdoing – it’s a routine procedure.”

Rusty DePass, who fought against voter approval of the sales tax referendum because he believed it would lead to government spending on unnecessary projects, said Thursday, “This is great news. I won’t be surprised if it turns up questionable spending, and I’m glad there’s going to be heightened scrutiny.”

In 2012, when Richland County residents voted 52-48 percent to approve an additional penny sales tax, there was no requirement in the wording of the ballot that the money raised and spent undergo thorough regular detailed audits.

The absence of any outside check on how county officials would spend taxpayer money was a factor in a similar 2010 referendum that voters defeated in part because many believed that County Council would use the sales tax money as a slush fund.

The penny sales tax, which raised the local county tax to 8 cents from 7 cents, is expected to be in effect for up to 22 years and generate up to $1 billion. Some 80,200 residents voted for the tax; 73,648 were opposed.

Its proceeds are to be spent this way: 63 percent to build, pave and resurface roads, 29 percent for public transit and 8 percent for sidewalks, bike lanes, greenways and intersection safety.

State DOR officials on Thursday released two letters they recently sent to Richland County officials.

In an April 15 letter, director Reames wrote to county administrator McDonald, telling him, “This review is to ensure public accountability and transparency regarding the collection and expenditures of revenue generated by the tax.”

In that letter, Reames told McDonald to direct county staff to let DOR employees “gain access to county records.”

In the second letter, dated May 8, DOR senior internal auditor Nichole Tucker wrote to McDonald and requested numerous records, including:

▪ Copies of records showing how money was collected, allocated and spent.

▪ Copies of any procurement policies.

▪ A list of approved projects, including “approval dates, start dates and completion or expected completion dates.”

▪ A list of all vendors paid with sales tax funds, including consultants, planners and management companies.

Responding to questions about the audit, DOR spokeswoman Ashley Thomas said the agency’s findings will be made public “not withstanding legal disclosure prohibitions or impeding an investigation.”

The audit will make recommendations “as warranted,” and “findings will focus on ensuring tax dollars are spent according to state law,” Thomas said.

“We will examine whatever documentation is necessary to ensure accountability,” she said.

No completion date has been set.

This story was originally published May 14, 2015 at 9:44 PM with the headline "EXCLUSIVE: State auditing Richland County’s penny sales tax spending."