The pace of major Richland County transportation improvements paid through the penny-on-the-dollar sales tax hangs in the balance as County Council debates ways to keep millions of dollars flowing.
But does the county need to borrow money to keep projects going?
So far, council and the county administrator have been secretive about whether getting a loan for what would amount to seed money is required to keep the list of road construction projects on schedule for the next several years.
Borrowing money by issuing bonds would mean saddling taxpayers with debt for those loans in addition to the penny-on-the-dollar sales tax.
Council is facing a preset March deadline for borrowing money for penny projects, and some reports indicate the flow of tax money for projects already on the drawing board might dry up by the end of June.
It’s not that the county doesn’t have money coming in.
Through August, the penny-on-the-dollar sales tax has generated $253.5 million – or nearly one-fourth of the projected 20-year total of $1.2 billion – in just three years.
“The question is what is the run rate – whether we’re spending faster than we’re collecting?” said Councilwoman Dalhi Myers, who represents much of Lower Richland and has four penny projects underway in her sprawling district. “Some of those projects are costing more than we were anticipating.”
Council held a two and a half-hour closed-door meeting Tuesday night that focused on whether the county should borrow money. Penny tax revenue is intended to pay for an approved list of upgrades to roads, sidewalks, pedestrian and bicycle pathways as well as improvements to the metro area’s bus system. But loans could bridge gaps if tax income doesn’t arrive in time for some projects.
County Administrator Gerald Seals has declined numerous requests by The State newspaper to be interviewed about penny tax issues, including whether to support taking out a loan by issuing bonds to sustain the construction schedule.
Council members interviewed, however, said they cannot make a decision about borrowing money without more information, including from the consortium of companies the county hired to oversee construction.
Four council members said they need to know more about the status of road projects, the cost of each and the pace of spending. They declined to go into details, citing the confidentiality of Tuesday’s closed-door session.
Pressure to keep pace with construction and other expenditures already has caused overdrafts of the county’s general fund to cover penny projects, Seals wrote in a Aug. 8 memo to council. The overdrafts amounted to almost $35 million for a range of projects, Seals told council in a follow-up Sept. 20 memo, and were improper because were unapproved by council. Seals said the problems were essentially bookkeeping errors that have since been fixed.
Myers and Councilmen Jim Manning and Chip Jackson said the private discussion Tuesday did not produce the answers council wants to decide on borrowing money.
But Manning and Jackson said the conversation centered on whether to borrow $100 million, $250 million or continue with pay-as-you-go financing using penny revenues.
Myers would not say whether the discussion drilled down to precise amounts of borrowing. But she did not dispute those specific amounts.
“The question is not, ‘Will we bond on (borrow) a, b or c (amounts),’” Myers said. “The question is whether we need to bond.”
Projects costing more
Lexington County would have borrowed money immediately.
The idea of borrowing to get some projects underway was among the main complaints during Lexington County’s failed attempt in 2014 to persuade voters to approve a penny increase for roads and other improvements.
That plan would have allowed Lexington County Council to borrow up to $150 million – half the expected income over the eight-year life of the tax – to get 31 projects underway within three years.
Lexington tax foes pointed out that property taxes could be raised to pay off the debt if sales taxes fell short of expectations and wouldn’t cover the bond payments. Financiers required a backup plan should sales taxes not raise enough, county leaders said.
In Richland County, the tax has raised an average of nearly $5.4 million per month so far this year, according to figures through August from the S.C. Department of Revenue, which collects the tax for the county. Since collections began in June 2013, the tax has generated $253.5 million for transportation, the figures show.
Those figures support assertions by Manning and other officials that the tax is bringing in money faster than what was projected.
But some of the more expensive road projects cost $30 million to $59 million each.
For example, upgrades along a 2-mile stretch of North Main Street, which began in the spring, is projected at $59.1 million – half of it from penny revenue and large portion from federal funds.
Penny money also is to pay for the widening of parts of Atlas and Clemson roads, which are projected to cost $31.7 million and $18.6 million, respectively, according to the most recent report from the penny consortium, which is called the “program development team.”
Construction is slated to start on Clemson Road early next year, followed closely by work on Atlas Road. Both are to become four-lane thoroughfares with sidewalks wide enough to handle walkers, runners and bicyclists.
Manning, a critic of the way Seals is dealing with the penny program, said, “In public, he’s giving the impression that we’re pulling in enough money.” That, the councilman said, is “too rosy” a picture of the financial situation.
To Councilman Paul Livingston, council’s longest-serving member, the borrowing decision is clear. “The options are pretty obvious,” he said. “No bond or bond from zero to $450 million. I don’t have enough information to decide what I think it ought to be.”
Taxpayers, in approving the penny tax, set $450 million as the cap on how much money the county could borrow, if needed, to finish projects.
Livingston is the only person on the 11-member council who asked if Tuesday’s entire discussion needed to be behind closed doors. He was told yes by county attorney Larry Smith because council was to get legal advice and was to discuss a contract, presumably the one with the consortium.
Hayes Mizell, who leads a council-appointed committee of citizens who advise the county on penny projects, said the citizens group does not know what’s going on.
And he’s not surprised.
“Always the last to know, that’s our experience for the last year,” Mizell said. “We’re merely a showcase for County Council.”
Myers said she disagrees with some who say indecision could postpone projects.
“We are not at the point where failure to bond will cause any delay,” she said. “We don’t need to manufacture a crisis.”
Myers expects council will get answers it needs within a few weeks from the consortium and from Seals’ office.
That will be plenty of time, county bond attorneys tell council members, to make the right decision on whether to incur public debt to keep building penny projects, she said.
Staff writer Tim Flach contributed to this article.