RICHLAND COUNTY, SC (WIS) - The Richland County Council has scheduled a special meeting Friday to discuss the S.C. Department of Revenue's decision to withhold funds for Penny Tax Program for the county's failure to bring the program into compliance with the state's tax laws.
The work session is scheduled for 3 p.m. Friday in council chambers.
In a letter written to Richland County Administrator Anthony McDonald on Wednesday, DOR Director Rick Reames III said while some of the County's proposed changes "improve accountability, the contemplated actions do not rectify a core problem of the County's Penny Tax Program - the absence of a uniform standard for determining qualifying expenditures to ensure all Penny Tax revenue is spent specifically on transportation-related projects."
As a result of the County's response to DOR, Reames said Wednesday, "The Department has a responsibility under the law to monitor Penny Tax collections, and absent further action, the Department's monthly allocation and the resulting July distribution of Penny Tax funds will be zero."
Reames added in the letter that should emergency funds be necessary for the COMET bus system, the County staff can ask DOR staff for limited funds.
The investigation into the county's Penny Tax Program started a year ago, and DOR released its findings earlier this year saying its review showed "millions of dollars of potential fraud, waste and abuse." The report lays out nine issues the Revenue Department found during its review of the program, including failure to perform audits, prohibited expenses, "excessive public relations expenditures," insufficient procedures, and conflicts of interest.
A State audit also found evidence of possible criminal misconduct. In December, the Department of Revenue notified County leaders the audit found "multiple instances of illegal activity by individuals and/or companies associated with the Penny Program."
"I regret the Department has been forced to take this step as a result of the Richland County Transportation Penny Program's continued violation of the express laws as passed by the General Assembly," Reames wrote. "The Department is obligated to uphold the state tax laws, yet stands ready to work together with Council to bring the program into compliance as expeditiously as possible."
Richland County Councilman Seth Rose said he saw this coming.
"There's a state agency saying our program is not within state law," Rose said. "That needs to be resolved immediately."
Rose expressed frustration Wednesday because, in January, he proposed a laundry list of changes to satisfy DOR and give a penny watchdog group more teeth.
"The motions I sponsored four-and-a-half months ago that would have addressed this problem, which would have given the Penny Program a clean bill of health and restored public trust to this program, has not been enacted by a majority of county council, my colleagues, and now we find ourselves here," Rose said.
Richland County officials are reviewing DOR's letter and issued the following statement:
"Richland County received the attached letter today (Wednesday) from the Department of Revenue and is in the process of reviewing it. The County will continue to work with DOR to bring this matter to a resolution and staff will address the topic with County Council on Tuesday at the regularly scheduled Council meeting."
Also, Richland County Council Chairman Torrey Rush said the county will continue to work with DOR on this issue and does not believe current road projects funded by the penny tax will be affected.
"As stated in the letter from SCDOR, we are and will continue to work with SCDOR to come to a conclusion on this matter," Rush said Wednesday in a statement. "Although current road projects will continue to move forward as planned, it will be essential that we move quickly toward a resolution in this matter in order to keep this program moving forward. We will continue to work with DOR, so that the citizens of Richland County can trust that their taxpayer dollars are being handled with fiscal responsibility."
How all of this will affect taxpayers is still unclear. But one of the biggest points of contention is about expenditures that DOR says should not have been made from the penny tax fund and whether the county will now have to take more taxpayer dollars out of the general fund to pay that money back.