A Richland County Councilman is proposing changes to the way the county handles its penny-on-the-dollar transportation sales tax program as the first steps to responding to allegations of potential corruption and fraud in the program.
Last month, the state Department of Revenue told the county it is investigating the way money has been spent and contracts procured concerning revenues from the 3-year-old transportation sales tax, which is to fund hundreds of millions of dollars worth of road, bicycle and pedestrian projects over the next two decades.
“Council kind of hunkers down, and we need to be showing leadership,” Councilman Seth Rose said. “We need to show the public that we’re trying to make changes for the positive.”
After consulting with staff and the county attorney’s office, Rose crafted three motions that will be presented to council at next Tuesday’s meeting. The proposals are likely to be referred to a committee before emerging as a recommendation to full council.
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▪ Repealing a county ordinance that allowed council to circumvent its typical procedure for awarding competitive contracts. The project development team contract for the penny program was awarded after county staff narrowed down applicants and council chose from the field.
Typically, council would not choose from a pool of applicants. Rather, it would approve or deny a recommendation from staff, and if it denied the recommendation, staff would come back with another, Rose said.
▪ Reimbursing the penny program of all money that has been used to fund the Small Local Business Enterprise program, which was created to ensure local business involvement in transportation projects.
The DOR singled out the SLBE program as an example of improper spending for a project that is not specifically transportation-related.
Rose proposes continuing the fund the SLBE program but with money from the county’s general fund rather than transportation tax revenues.
▪ Giving new oversight duties to the penny tax citizens’ advisory committee and making its chairperson a voting member of council’s Transportation Ad Hoc Committee, which reviews information and makes recommendations to the full council.
The latter point – making a non-elected citizen a voting member of a council committee – would be an unprecedented move for council, Rose said, and it’s the point on which he expects to receive the most pushback from fellow council members.
But it would be an important move, he said, because it would give the citizens’ group more teeth as a true watchdog organization.
“They would have access to all information and documents, privileged and nonprivileged,” Rose said. “Then it can’t be said that the watchdog committee only has the information that staff has provided them.”
Reach Ellis at (803) 771-8307.
PENNY SALES TAX INVESTIGATION
The S.C. Department of Revenue said last month that a seven-month audit and review of the Richland County’s handling of penny sales tax revenues raised questions of “potential public corruption and fraud.”
The DOR referred its investigation to the State Law Enforcement Division for further inquiry into possible criminal activity and said it would continue its own investigation.
DOR criticized the county for: 1) the process by which it awarded the contract for managing penny revenues, 2) the amount team members were being paid for public relations work and 3) using sales tax money to fund the county’s Small Local Business Enterprise program, which was created to ensure local business involvement in transportation projects but has grown beyond that.
PENNY SALES TAX STATUS
Richland County’s penny-on-the-dollar transportation sales tax has collected more than $126.6 million in the nearly three years since it collections started.
The county also has borrowed an additional $50.3 million against future revenues, for a total of $176.9 million in penny tax funds.
As of November, $68.2 million had been spent on projects.
The tax is expected to bring in some $1.2 billion over 22 years.