Judge to order penny tax funds released to Richland County

A judge plans to order the state Department of Revenue to release the next installment of transportation penny sales tax funds due to Richland County in July.

Judge Thomas Cooper’s law clerk emailed both parties in the lawsuit Wednesday afternoon saying the judge plans to order the release of the estimated $17 million in penny tax revenues the county is due in mid-July.

The judge’s order has not been issued, and its possible details are not yet known. The order might contain other conditions to the release of the funds.

“No official order has been issued, and therefore we do not yet know the court’s complete ruling,” DOR said in a statement Wednesday. “We look forward to a final resolution that ensures what this effort has always been about – protection of taxpayer dollars.”

Ned Nicholson, a private attorney representing the county, and state Rep. James Smith, an attorney hired by DOR, argued before Cooper on Tuesday regarding the county’s disputed penny tax.

The county sued DOR last month, accusing the agency of an “unprecedented” and illegal power grab in trying to control the spending of millions raised by the penny tax and in threatening to withhold the money from the county.

DOR has said the county has illegally spent the funds and argued the state agency has a duty to ensure they are spent properly. DOR turned over findings from its 2015 audit to the State Law Enforcement Division, which continues to investigate possible criminal wrongdoing related to the penny tax program.

The $1 billion, 22-year sales tax program was approved by voters in 2012, and collections began in 2013. DOR collects the tax from businesses, sends it to the state treasurer and advises the treasurer’s office how much money to distribute to the county each quarter.

Richland County Council Chairman Torrey Rush said Judge Cooper’s expected order is a win not just for Richland County, but for counties across the state that can have confidence in their ability to “control the way they operate.”

“Infrastructure is a problem all over this state,” Rush said. “So when local governments take on the task of getting funds through the penny in order to take on some of these infrastructure issues, it’s a big deal.”

The court “decided it’s within the county’s operating parameters to continue to operate these dollars the way they need to to serve the citizens of the county,” Rush said.

The assurance of penny tax funds continuing to flow to the county will give confidence to the county’s transportation project partners and creditors, who have lent and could lend money in the future for transportation projects, Rush said.

The penny program’s accomplishments thus far include more than 70 projects, according to the county. Projects scheduled for completion this year include the first phase of a revitalized Greene Street near the University of South Carolina campus, the extension of Shop Road, the Lincoln Tunnel Greenway and the Riverbanks Zoo pedestrian bridge.

Nearly a third of the tax also supports the Central Midlands Regional Transit Authority bus system.

Councilwoman Joyce Dickerson said she had just finished talking with CMRTA director Bob Schneider when she heard the news about the judge’s expected order Wednesday. They had been discussing “what-ifs” about what would happen to the bus system if the next penny tax payment did not come in, she said.

“To me, the primary goal here is we can’t get people to work and to the hospitals and other appointments they depend on” if the buses were not funded, Dickerson said. Many voters “supported that penny for that purpose, and anything short of that would have been devastating for so many families.”

“We have been stressed out with this for the past six months,” Dickerson said. “And I know we probably have a few more hurdles to cross, but this was the big one.”

In addition to the ongoing SLED investigation, the county still faces a lawsuit from a citizen watchdog group alleging illegalities in the penny tax program and calling for a halt to the program’s spending.

Plus, DOR could appeal Cooper’s expected decision in the matter of its authority to oversee the penny tax’s spending.

DOR attorney Smith said Wednesday he’ll have to wait until the judge’s decision is published to decide how to move forward.

“Our focus has been to protect the taxpayers of Richland County to make sure the money is spent within what is allowed in the law,” he said.

Councilman Paul Livingston, who chairs the council transportation committee, said he doesn’t expect the dispute over the penny tax has ended but believes that allegations of wrongdoing in the program are “not based in hard facts.”

“Every (council) decision, I think, was concerned about what was in the best interest of the citizens of Richland County. ... It doesn’t mean we’re perfect in every decision we make,” Livingston said. “I’m very pleased with the judge’s order, and I think it makes a whole lot of sense for DOR to not be able to tell county officials how best to spend the county resources.”

This story was originally published June 29, 2016 at 3:51 PM with the headline "Judge to order penny tax funds released to Richland County."