Richland County leaders are “concerned just like the general public is” regarding accusations by the state Department of Revenue of potential corruption, fraud and wasteful or illegal spending in the county’s handling of transportation sales tax revenues.
“We feel that since the beginning of the penny sales tax, we’ve been taking the proper steps to make sure that we’re in compliance with the law in our procurement process,” County Council Chairman Torrey Rush said at a Tuesday news conference called in response to a letter of audit findings sent by DOR to county administrator Tony McDonald Dec. 3.
It was reported Monday by The State newspaper that DOR has referred an investigation of the county’s transportation sales tax activities to the State Law Enforcement Division for further inquiry into possible criminal activity, in addition to an ongoing investigation by DOR.
Rush stressed Tuesday that county leaders are in the dark on most details of DOR’s findings that apparently suggest possible corruption and fraud. The county is awaiting a response to a letter dated Dec. 9 asking for such clarification and promising full cooperation with any investigation, he said.
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In the meantime, the transportation penny tax program and projects that are already underway will continue as planned, Rush said.
One of the specific issues raised by the DOR letter is the $600,000 being paid annually from penny tax revenues to two public information firms “for the equivalent of fewer than two full-time employees,” according to the letter. Those were hired “when an entire public information office already exists within Richland County government,” the DOR said in the letter to McDonald.
Richland County officials identified those firms Tuesday afternoon as the Campbell Consulting Group and BANCO Bannister Co., both Columbia-based companies and both certified under the county’s Small Local Business Enterprise program.
The public information firms were included in what has been previously reported to be a five-year, $50 million program development contract awarded in July 2014 to the team of ICA Engineering, MB Kahn Construction Co. and Brownstone Construction Co.
Campbell consulting has been paid $323,974.04 and BANCO paid $300,000 since the program development team contract was executed Nov. 3, 2014, officials said.
County spokeswoman Beverly Harris said she could not immediately provide the contract for the program development team when asked Tuesday. David Beaty, ICA program manager for the development team, referred most questions, including the contents of the contract, to county officials.
Moving forward, the county plans to hire an independent forensic auditor to review the county’s transportation tax activities, Rush said Tuesday. A forensic audit looks into legal and financial documents and is intended to detect criminal activity or other improper spending.
It would be a one-time audit in light of the concerns raised by DOR, Rush said, but “if we feel there needs to be steps taken (in the future) to ensure public confidence, then we’ll take those steps.”
The county’s controversial penny-on-the-dollar transportation sales tax, first levied in May 2013, has generated more than $126 million since then, according to the most recent monthly progress report posted online by the program development team. More than $68 million has been spent.
The tax’s revenues over its 22-year lifespan are expected to exceed $1 billion, with the majority of the money pledged for road and intersection improvements. Some money will go to buses and trails.
Voters approved the tax in a hotly contested referendum in November 2012, as part of an election marred by long lines, malfunctioning voting machines, lost votes and election managers who lost the public’s trust early in the day.
Since then, Rush said, “We’ve tried to put all the processes in place to make sure that we take care of the public dollars. And we understand that’s been the concern from the onset of the penny program. And as we move forward, we want to continue to take care of the public dollars.”
Oversight of the penny tax’s implementation, though, has been a point of contention. The Transportation Penny Advisory Committee (TPAC), formed as a citizens’ watchdog group, has been given little to no backbone, much less authority, by County Council.
“I think the very limited role of the TPAC is at odds with the public’s expectation when the penny referendum passed,” TPAC chairman Hayes Mizell said. “As I have said on numerous occasions, we really are not an oversight group. We’re not a watchdog group. ... We are an advisory group, and even there the issues we can advise on are rather limited.”
Councilman Greg Pearce, who has served on council for 16 years, expressed deep concern over DOR’s allegations and frustration at not knowing any more details. “In my entire career on County Council, I have never been so overwhelmed with something that I did not know how to deal with,” Pearce said.
Staff writer John Monk contributed. Reach Ellis at (803) 771-8307.
The penny sales tax furor
The Department of Revenue said in a Dec. 3 letter to the county it has three areas of concern:
▪ Potential public corruption and fraud in the manner in which the project development team was hired.
▪ Multiple unspecified instances of illegal activity by individuals and/or companies associated with the penny program.
▪ Expenditures that seem to fall outside the parameters of state and local transportation tax laws, including the hiring of the two public information firms.