Richland County Council suspends spending on questioned projects

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After nearly two hours in executive session, Richland County Council responded to the S.C. Supreme Court’s ruling that some revenue from its Transportation Penny Tax program has been spent improperly.

In a specially called March 9 meeting, the county froze spending on the projects in question. While noting in a statement that the ruling two days earlier applied to less than 1% of the approximately $242 million spent through the Penny Tax program, the county said it was prepared to “remove the offending expenses.”

The state high court sided with the S.C. Department of Revenue in a years-long dispute, finding that a portion of Penny Tax money has been spent on projects not related to transportation issues, a violation of state law. The ruling halted Penny Tax spending and directed a circuit court judge to require the county to adopt measures to ensure funds are spent only on transportation-related projects and related administrative costs.

The county could also be required to repay improperly spent funds.

The council adopted a measure that freezes penny tax funding for the Small Local Business Enterprise program as well as money spent on two public relations firms and a mentor program. That spending will stop until the county and the revenue department concur on proper use of penny tax funds.

“Now that those issues have been resolved by a final authority, the County is prepared to fully comply with the Court’s order,” the March 9 statement said. “Richland County has a solution to the Court’s ruling that is responsive, responsible and ready to be implemented.”

The Penny Tax, which went into effect in May 2013 after being approved by Richland County voters in November 2012, was projected to generate more than $1 billion over 20 years, but the revenue department alleged mismanagement of funds in December 2015. The State newspaper reported more than $554,000 in Penny Tax funds have been used in the county’s Small Local Business Enterprise program, and two public relations firms hired to promote the Penny Tax program had been receiving $25,000 a month.

The high court also ruled that the revenue department, which collects the penny tax and distributes the proceeds, did not have the authority to withhold those proceeds from the county. Richland County sued the revenue department in May 2016 over those withholdings.

In a March 9 joint statement, Richland County and the revenue department said the organizations are working together to "implement the Supreme Court’s decision, establish guidelines and ensure all expenditures are compliant with the Transportation Act retroactively and in the future."

Before the council went into executive session, chair Joyce Dickerson said the members needed to be on the same page and fully understand what Wednesday’s ruling meant. Councilmen Norman Jackson and Calvin Jackson emphasized the importance of informing the public of what happened in the executive session before the chamber was cleared.  

Richland County said in a statement released the day after the court ruling that it “will not pose a negative impact on the county financially.” It said other projects, including the redevelopment initiative known as Richland Renaissance which would establish new county offices at the site of Columbia Place Mall and a new judicial center in downtown Columbia, are proceeding as planned.