DOR final audit reports Richland County misspent over $30 million taxpayer dollars

Published: Aug. 4, 2020 at 9:16 PM EDT
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COLUMBIA, S.C. (WIS) - $32 million that came out of the pockets of Richland County taxpayers was misspent, according to a final audit report by the South Carolina Department of Revenue into the Penny Tax Program.

The Penny Tax Program, passed in 2012, is meant to fund transportation projects including highways, roads, bridges, mass transit systems, and other transportation projects.

“The penny program was designed to create and produce a livable transportation program that benefits the community,” Richland County administrator Leonardo Brown said.

The final audit report was conducted in the context of on-going litigation between the Department of Revenue and Richland County over the use of the funds for the period of 2013-2018. In October of 2019, the Department provided Richland County with its preliminary report, which found that the county had misspent $41 million from the Penny Tax fund. The department gave Richland County 90 days to dispute any conclusion and provide additional information before the department released its final report.

W. Hartley Powell, the Director of the Department of Revenue said in a letter to Richland County Council Chairman Paul Livingston in the final audit that “the extent portions of the final audit report remain unchanged from the preliminary findings, we found the County’s explanations unpersuasive and/or inconsistent with the Transportation Act, the Supreme Court opinion, or the Guidelines imposed by the Circuit Court.”

The DOR said Richland County owes the Penny Tax fund $32 million, after using the taxpayer dollars on things that aren’t transportation projects. The summary of the audit findings lists the ineligible expenses as audit expenses, Richland County operating expenses, mentor-mentee program fees, legal expenses, PDT start-up costs and recurring costs, public relations costs, small local business enterprise, Mill Creek Property-Mitigation Bank, PDT program management fees, and the Central Midlands Regional Transmit authority. The report said the county has already repaid nearly $1.5 million to the General Fund, so the total amount that is still owed is $32,471,673.

Some of the big-ticket items included nearly $7 million spent to purchase Mill Creek Property and $1 million on public relations costs. $1.8 million went towards start-up costs for a project development team, which included the county paying for things like office supplies, cars, an icemaker, computers, and office furniture. As well as nearly 20 million for PDT’s management fees, which included salaries for 29 positions.

Richland County Council Chairman Paul Livingston responded in a statement yesterday saying:

“Based on the information available to Richland County at this time, Richland County disagrees with the majority of SCDOR’s findings. Those findings and conclusions have not been substantiated by information provided to Richland County and some appear to be based on conjecture. The lion’s share of SCDOR’s findings are attributable to a third party. Richland County plans to seek all remedies available to it to ensure that the integrity of its transportation improvement program remains sound.”

Richland County Administrator Leonardo Brown said on Tuesday that he hopes the council and DOR can reach a resolution soon.

“My ultimate goal is to make sure that the penny program is operating in a manner that is consistent with the taxpaying communities’ expectations, as well as within the bounds of SC laws, and until that happens, I won’t be happy,” Brown said.

Brown said he also worries about how the county will fork over $32 million if a resolution isn’t reached.

“In an environment where we are already talking about potential reductions in revenue as a result of COVID-19, if in fact, that’s something that Richland county has to do, it certainly will create some stressors on the county,” Brown said.

The Director of the Department of Revenue said in the letter that if the county intends to continue with litigation, the department will present the final audit report to the circuit court and ask the court to order the reimbursement.

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