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Richland County, state revenue officials working toward penny tax resolution

Richland County and the state Department of Revenue are closing in on a resolution over the county’s transportation penny sales tax program.

In February, revenue director Rick Reames dictated four actions the county must take concerning its penny tax program or face unspecified consequences. Reames’ department has criticized the county’s use of the 1 percent sales tax, alleging possible corruption, fraud and misuse after an investigation of the 3-year-old program.

The county responded with specific changes it has begun to or will make to “mitigate those concerns” in an April 8 letter from county administrator Tony McDonald to Reames.

A week earlier, on April 1, an attorney for the revenue department wrote to an attorney for the county a proposal of actions, which are largely mirrored in the county’s most recent response.

“We believe that these changes will bring the County’s Penny Tax Program into compliance with state law and potentially serve as a template for the administration of transportation funds for other counties to follow,” revenue department attorney Milton Kimpson wrote.

Still, there continues to be “some legal debate still out there as it relates to authority issues,” Richland County Council Chairman Torrey Rush told The State on Thursday.

“I’m excited about where we are, and hopefully we can get this behind us and do what we need to do as it relates to building roads and paving roads,” Rush said.

In a statement Thursday, the revenue department said, “We appreciate the county’s response. There are still some unresolved issues the Department feels must be addressed, but we continue to work toward full resolution.”

Here are the actions the county has said it will take in response to the four specific issues raised by the revenue department:

Small Local Business Enterprise program (SLBE)

The county will refund start-up costs for this program that were paid for by the penny tax. The refund will come from the county’s general fund budget for the coming financial year, which begins July 1.

Rush said the county has not yet determined a dollar figure for the reimbursements, but he noted it could have a significant impact on the county’s finances as the upcoming year’s budget is assembled.

“The last thing I want to do is double-tax the citizens for the same program,” Rush said.

The county also said it is reviewing all SLBE operating expenses to date and will reimburse from the general fund any expenses not attributable to the transportation penny program.

Richland County defends 2 penny tax uses questioned by state investigation

In the future, SLBE costs will be paid according to the department using the program. So, SLBE functions used by the transportation penny program will be paid from penny tax revenues, and other departments using SLBE services will pay for those functions from their own budgets.

Public information firms

Public information tasks for the penny tax program now will be paid per meeting or task conducted rather than by lump-sum, advance payments.

Each function — which will include conducting public information meetings, news releases, groundbreaking events, and preparing bi-weekly and monthly reports, among other tasks — will have prenegotiated, established fees.

The county will review all public information expenses to date and will reimburse from the general fund to the penny program any expenses that are not attributable to a specific task identified in an approved task list.

Independent audit

McDonald noted in the county’s letter that the transportation penny tax funds already are audited because they are part of the county’s annual audit.

But, the county said, it is currently drafting the scope of a separate financial audit specific to the transportation penny program. It will include detailed financial audits of transportation penny accounts and of the program’s management team.

The scope of the audit will be reviewed by the citizens’ Transportation Penny Advisory Committee before it is conducted, and the results of the audit will be made public.

Future penny tax expenditures

The county already follows Governmental Accounting Standards and will continue to follow those standards in the spending of penny tax funds, McDonald wrote.

The steps being taken to address the three previous items also would address the revenue department’s directive to assure that future uses of the penny tax are solely related to capital costs associated with transportation projects, the county said.

Also, the county will “continuously assess” any lump-sum contracts paid by the penny tax and decide whether task-by-task payments could save taxpayer money.

Reach Ellis at (803) 771-8307.

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