COMET bus system could have to pay back $1 million in penny tax spending
The COMET bus system has been told it may have to repay $1.4 million in penny tax funding that the S.C. Department of Revenue has deemed impermissible.
COMET board chairman Ron Anderson told The State the publicly-funded bus system is discussing the final number with DOR, following an audit by state revenue officials and a Supreme Court ruling limiting how money from the $1 billion program can be spent.
The court ruled that under the State Transportation Act, money from the county’s road tax must be spent almost exclusively on capital costs. The ruling specifically questioned money the county was spending on public relations and a small business enterprise program.
DOR and the COMET disagree on the interpretation of what spending is allowed after the court’s decision, the chairman said.
“There are some things they think it can’t be spent on, and we do, and we can’t see how they decided those were the things it couldn’t be spent on,” Anderson said.
The bus system is the second entity in a legal fight with DOR about how money from the one-cent sales tax has been spent since a 2012 voter referendum. Richland County’s roads program could be on the hook to repay at least $40 million, according to one S.C. lawmaker who has seen the still unreleased audit report.
S.C. Rep. Kirkman Finlay, R-Richland, went public last week with concerns that state government might need to step in to bail out the county if Richland is ultimately required to pay back such a figure.
But the COMET would not face quite such a pressing situation, Anderson said. The bus system receives approximately $5 million annually from rider fares and state funding, so funds could be shifted to cover the cost.
“We’re very fortunate that we have multiple streams of funding... that are not restricted,” he said. “We’re fortunate we’re not in the same position as the county.”
But penny funding currently makes up the bulk of spending on the bus system, about $19 million of a $24 million budget. Since the penny tax came into effect, $104 million in penny tax funds — or just under a quarter of total tax receipts — have gone to the COMET, according to the most recently available figures.
Anderson declined to say what DOR found objectionable about the bus system’s penny spending, but the Revenue Department has stepped into a court case challenging the county’s ability to spend money on regular mass transit operations. A lawsuit argues the state’s transportation act only allows money from a temporary sales tax to be used on one-time capital expenses, like new road construction or purchasing equipment.
DOR has filed a brief to the lawsuit brought by the S.C. Public Interest Foundation that lends some credence to that viewpoint. The department’s amicus brief “encourages this Court to make a determination about whether and to what extent CMRTA’s operations expenses are properly paid with Penny Tax funds.”
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