Richland Council split on settling dispute with state officials over road tax program
A sharply divided Richland County Council is split on whether to settle a multi-million dollar lawsuit over its penny tax roads program.
Some of the most vocal council members worry the county is on the brink of walking away from a potential end to the dispute, and it will end up costing taxpayers more money as a result.
Two weeks ago, eight of 11 members of Richland County Council voted to move forward with a proposed settlement with the S.C. Department of Revenue that would end a legal challenge to how the county has spent revenue on the $1 billion penny program.
But on Tuesday, council members changed course and voted down the proposed settlement, opting instead to go back into mediation with DOR after meeting for two lengthy sessions behind closed doors.
Members were reticent to discuss details of the ongoing negotiations between the county and DOR, but clear divisions opened up within the council about the best way to move forward.
Councilman Joe Walker said he thinks some members are drawing out the process to avoid a final reckoning with what went wrong, and feel they still need to defend how the program was managed from the beginning.
“They’re holding out almost for an apology,” Walker said, “which to me is putting your individual interest ahead of the county.”
S.C. revenue officials have long challenged some of the spending decisions the county has made after voters approved the sales tax for the transportation improvement program in a 2012 referendum. The case went to the S.C. Supreme Court in 2018, which led to the county being told to repay millions spent on public relations, a small business program and attorneys’ fees. Those costs were not allowed because they are not transportation-related, the court found.
A DOR-initiated audit found more impermissible spending, up to $41 million worth. As detailed in The State in December, the department requested repayment of “duplicative” payments to the former road construction managers as well as routine office supplies and other costs.
On Tuesday, Walker voted in favor of the settlement, along with councilwomen Gwendolyn Kennedy, Dalhi Myers, Chakisse Newton and Allison Terracio. Voting against were Council Chairman Paul Livingston, Joyce Dickerson, Calvin “Chip” Jackson, Bill Malinowski, Jim Manning and Yvonne McBride.
“I believe we are on the verge of snatching defeat from the jaws of victory with DOR,” Myers said after the vote. “It’s time to settle this matter and focus our precious time and scarce resources on penny projects, not fighting a losing battle.”
But Jackson — who voted in favor of the settlement proposal two weeks ago along with all members other than Malinowski, Manning and Livingston — emphasized that he still believes the two sides are “95% agreed” and there are only “one or two issues we are asking them to reconsider.”
Jackson said the primary disagreement is not over a particular dollar amount for a settlement, but “terms and conditions” that would ensure future spending decisions on the penny program don’t face the same challenges.
“I would like to see it resolved,” Jackson said. “This has become an albatross.”
Livingston said the differences between the two sides concerns different ways of calculating allowable expenses. A mediator may be able to iron some differences, he said.
Other council members were reluctant to discuss the issue at all. Dickerson told The State she would have to speak to the county attorney before she discussed a topic the council took up in executive session. Manning said that DOR “specified that council members not divulge audit-related information until it is finalized.”
“It’s very frustrating because (the council’s decision) doesn’t seem to be based on logic or reason, just the emotion of the day,” Walker said. “We know what we’ve got in a settlement, we don’t know what we’re going to get if we go into mediation and it leads to a trial.”
A frustrated Terracio said it is “magical thinking” to expect the county could get a more favorable deal than what’s already on offer.
“This is one of the biggest issues I’ve had to deal with on council, and it will have a significant effect on Richland County,” the freshman council member said. “We need the public to know what’s going on. It’s serious.”
This story was originally published March 20, 2020 at 11:59 AM.
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