Can Lexington County avoid Richland’s controversies in proposed penny tax?
As Lexington County voters consider whether they want to pay a new 1% sales tax to fund $536 million worth of road work across the county, many share the concern that their penny tax could replicate what they have seen in recent years on the other side of the Congaree River.
Since voters in neighboring Richland County approved a penny tax in 2012, the program has been hounded by problems. At one point, the Richland penny program faced a $154 million deficit in getting all of its $1 billion transportation improvement program completed. The state Department of Revenue also challenged $40 million in county spending as improper, leading to a settlement agreement last year that required Richland County to pay $15.5 million back into the roads program.
That track record has some Lexington County voters worried about how a similar program in their county would be run, and whether they are signing up for similar problems down the road.
Lexington County voters already rejected a proposal for a similar penny tax in 2014, so any trepidation about the program now could affect how voters cast their ballots on Nov. 8.
County officials say Lexington County’s program will be nothing like their neighbor’s.
“It’s been a common theme,” said Lexington County Administrator Lynn Sturkie. “We’ve been around the county giving presentations, not to say vote yes or no, but to give the facts, and I do get asked that question at almost every single one.”
Lexington County’s program will be roughly half the size of Richland’s $1 billion penny tax program. Voters will be asked to approve funding at least $536 million worth of projects out of a total project list worth $639 million. Additional projects could be funded if the sales tax draws more than $536 million over its eight-year lifespan, and the remaining $103 million in projects are dirt road pavings.
Lexington County officials say they worked to get their project list down to the bare essentials. The county even rejected an earlier version of the project list because it included too many other kinds of projects. The specially-appointed committee tasked with drawing up the list then dropped $27 million worth of projects from the list, mostly infrastructure improvement initiatives proposed by the county’s municipalities.
The Lexington Chamber is campaigning in favor of the sales tax as a potential boon to local business and quality-of-life, along with the Lexington County Development Corporation and the chambers in Cayce-West Columbia, Irmo and Batesburg-Leesville.
“One of the top complaints of Lexington County residents is the condition of our roads and congestion,” Lexington Chamber President Angelle LaBorde said in a statement. “The proposed Capital Projects Sales Tax provides a solution to these issues. The roads and congestion will not improve as state resources are limited without county matching funds. To reduce congestion and time spent in our cars, Lexington County residents must take the initiative to fix our roads and enhance our quality of life. The costs will continue to rise, so if not now, when?”
Scott Jones, a Chapin resident who co-owns American Floral in Irmo, opposed the 2014 penny tax effort, but now says he’s in favor of the 2022 version.
“I’m a really staunch conservative, I’m low-tax, but I’ve also got a small fleet of vehicles on the road and two kids, one who just started driving and one that’s about to,” Jones said.
Richland County’s program was initially managed by an outside consortium of companies — the Program Development Team, or PDT — formed specifically to oversee the penny program. That created 29 new taxpayer-funded positions, and led the Department of Revenue to flag what it labeled improper spending on everything from office supplies to taxpayer-provided vehicles for the group.
Bobby Porter, a resident of South Congaree and former member of the town council, is suspicious of whether penny tax money will ultimately go where Lexington County voters want it to go.
“We need a different set of eyes on it,” Porter said. “We need an independent auditor to come in and look at the books.”
Sturkie said Lexington County will look to manage its program internally as part of its own transportation department. Any additional staff brought in to cover penny projects will be paid out of the county’s general fund, so that all money raised by the penny tax will be spent on roads. The penny tax funds also won’t cover other features that fell under Richland County’s broader transportation tax, like funding for the COMET bus system and communications efforts to promote penny projects.
“We are working on a staffing plan, could be a hybrid model” of county staff and outside consultants, Sturkie said. “Another important point is that the municipalities also manage their projects, and they will submit us invoices on a reimbursement basis.”
While responsibility over the projects will be split between Lexington County and more than a dozen municipalities, Sturkie said the county will have centralized oversight of the millions expected to be collected by the penny tax.
“When it comes to money, there will be one person who will oversee everything and report to our CFO,” he said.
West Columbia City Councilman Michael Green opposes the penny tax out of a concern that continuing inflation and a potential recession will eat into the costs of many projects, especially if there is a delay in getting road work up and running.
“Have you ever seen a government project come in under cost?” Green said.
Sturkie said shovel-readiness was a key part of how potential penny projects were ranked, precisely because the county wants to move quickly to get projects up and running.
“The last thing we need is to have this approved, and then have no work done for three or five years,” he said. “If this is approved, collections will begin in May ‘23, with the first disbursement in October. The county doesn’t receive anything for almost a year, so we need to move quickly.”
Lexington has looked at how other S.C. counties have managed similar programs and has reached out to learn from their experience. Sturkie cited York County’s own road tax program as a model to follow.
The county administrator says he’s heard complaints that residents already pay the state gas tax and other county taxes, assuming that money would go toward fixing county roads. But Sturkie points out that the S.C. Department of Transportation’s priorities for gas tax spending are major infrastructure like interstates and bridges, with many local roads likely years away from getting the kind of work the penny tax aims to provide.
As for local tax money, 71% of the county’s $166 million general fund budget goes to just five county departments — fire, law enforcement, EMS, 911 and public works. Thirty-three other departments split the remaining 29%.
“If you break it down, potentially the funds aren’t there,” Sturkie said.
The county has tried to answer as many questions as they could have anticipated on a dedicated website, LexingtonCountyCPST.com.
This story was originally published October 30, 2022 at 5:30 AM with the headline "Can Lexington County avoid Richland’s controversies in proposed penny tax?."
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