Richland County may be forced to repay $40 million in penny tax funds, lawmaker says

Richland County may be forced to repay at least $40 million spent as part of its penny roads tax, according to a state lawmaker who has read a preliminary S.C. Revenue Department audit of the program.

Rep. Kirkman Finlay, R-Richland, says the audit will show that the county may be on the hook for between $40 million and $50 million it may have misspent in the penny tax program meant to improve the county’s transportation needs.

Finlay says he was shown a copy of the as-yet unreleased document by a constituent, out of concern for whether Richland County would be able to cover the full cost of the liability if they are ultimately required to repay.

“My concern is, will the state be forced to step in?” Finlay said. “Are you asking if Greenville and Charleston would be willing to spend millions to bail out Richland County? My guess is they will be less than enthusiastic.”

He wants to see the county and the Revenue Department make the audit public.

“It’s an account of public finances by a public agency,” Finlay said. “There should be public disclosure. Let’s talk about it.”

Richland County Council Chairman Paul Livingston declined to comment, but said the county would have a formal statement on the audit ready “as soon as we can.”

Councilman Joe Walker declined to confirm any numbers in the audit, which was presented to the council behind closed doors, stressing that any findings are still preliminary.

“While I’m very much a champion of transparency where it’s appropriate, sometimes legal issues preclude some information coming forward in the best interests of the county,” Walker said, citing the ongoing legal dispute between the county and DOR.

The county has been in a long-running legal dispute with DOR over the $1 billion program approved by Richland County voters in a 2012 referendum.

In March 2018, as a result of a legal challenge brought by the Revenue Department, the state Supreme Court ruled that the county could be required to repay money deemed to have been spent improperly, and that the Revenue Department could withhold funds until the county ensured the money was spent legally.

That ruling flagged money spent on the county’s Small Local Business Enterprise program and to hire two public relations firms to educate the public about the transportation program.

The court’s ruling questioned those expenditures, noting that money from the penny sales tax must be spent on transportation-related capital projects or the “administration of a specific transportation project,” The State reported at the time.

In July, DOR’s general counsel wrote to county council that the department was “nearly complete” in its long-running audit of the program, indicating this would report its findings to the county soon. Two weeks ago, the county council held a specially called meeting to receive information about the DOR suit, spending almost two hours in a closed executive session.

When The State filed a freedom of information request for the audit results from the Revenue Department, the agency declined to release the findings because they were “informal” and “incomplete.”

“(DOR) has not presented Richland County with any final documents, findings, reports, audits, or otherwise,” the department said in response to The State’s request. “The preliminary audit report does not reflect the Department’s final report or final audit findings.”

But Finlay said he wanted to make sure plans are being made to pay back the money if required.

“There’s a document that says the county could have to pay back $40 million, maybe $50 million,” Finlay said. “What’s the plan for that in the 2020-21 budget. We need to have a contingency plan in place.”

Finlay has long taken an interest in the county’s roads program. In August, the Richland Republican filed a complaint challenging the license of the Cherry Bekaert accounting firm, which conducted its own audit of the program on behalf of the county. Richland County is in a dispute with the firm over obtaining documents related to that audit.

Bristow Marchant is currently split between covering Richland County and the 2020 presidential race. He has more than 10 years’ experience covering South Carolina. He won the S.C. Press Association’s 2015 award for Best Series on a toxic Chester County landfill fire, and was part of The State’s award-winning 2016 election coverage.