Some members of the Richland County Council met with the South Carolina Department of Revenue recently, but it's unclear if they talked about the audit that's still not been made public of the county's penny tax program. It's the latest in an ongoing battle between state agencies and county leaders about whether the money is being properly spent.
During an hours long meeting on Wednesday, October 16th, the South Carolina Department of Revenue met with a delegation of Richland County Council about the county's Penny Tax program, according to council members whom did and did not attend.
"Yes I am aware a delegation with Richland County SCDOR met last week. The whole of Council was not provided a report, nor made aware of any report presented at the meeting," Councilman Joe Walker said when reached by phone on Monday.
Walker did not specify what findings, if any, were presented in the meeting on the 16th. Walker told WLTX he was not a part of the County's delegation which met with DOR, nor was he present for any part of the meeting
County, Department of Revenue have battled for years over the penny tax
The penny tax was approved by voters in 2012 and put into place the following year. It was designed to raise money for transportation projects across the county, and since then It's been used to repair cracked, damaged streets such as Percival Road.
But in 2015, the South Carolina Department of Revenue, which is charge of collecting the penny tax money and giving it to the county to spend, told the county it wasn't using all of that money properly. Specifically, the state agency found some penny tax money was being used for two outside public relations firms and by the county's small local business enterprise program for software and legal services that weren't transportation related.
The revenue department even tried to stop the money raised from the tax from going directly to the county. Eventually, the case headed to the South Carolina Supreme Court.
In 2018, the high court ruled the Program Development Team (PDT), a combination of three companies contracted to handle the County penny tax, improperly spent more than one million dollars. The court said the revenue department had the right to tell the county how it should spend the money, but also ruled SCDOR couldn't withhold funding from the program. The county then promised to make changes to how the money was spent that would be in line with the court's ruling.
New questions raised, second audit prepared
But that decision didn't end questions about how the money was being spent. Gerald Seals, the former Richland County Administrator who was fired by the council last year, claimed in a July 2019 deposition that money was still being misued.
Meanwhile, the county paid for its own independent audit of the program performed by Cherry Bekaert LLP that was said to be completed in 2017. The audit is separate from the one conducted by the SCDOR.
The audit has not been released to the public. Councilman Walker said in a July 2019 letter he was forced to sign a non-disclosure agreement to review summary documents concerning that audit. Since then, Bekaert LLP has been urged by Walker and the county to release the documents, or provide information on how it reached its audit conclusions.
State Rep. Kirkman Finlay of Richland County even filed a complaint with the state’s Labor, Licensing and Regulation Department about Cherry Bekaert’s refusal to release the audit.
“They won't give you the audit? It isn't cause it's good. Cherry Bekaert is not holding this audit back and trying to get NDA's, non-disclosures, because it's great,” Finlay said about the situation in August.
The council has also ordered the PDT to send more than a million documents to the county detailing penny tax expenditures, finances, and other relevant history.
In late September, the County announced it planned to release all of those documents publicly after a formal review and any necessary redactions. But so far, after numerous WLTX requests, the County has not released any of the documents nor indicated specifically when they will begin to be released.
In late September, Richland County administrator Leonardo Brown wrote a letter to Cherry Bekaert asking the company to specify which documents now in the County's possession, of the more than one million, were the basis for its audit findings.
Full version of state audit nears completion
On October 3 of this year, WLTX confirmed the Department of Revenue was almost done with its more complete audit of the program stretching from May 2013 to May 2018.
“The purpose of this audit is to ensure all expenditures are in compliance with South Carolina law,” a DOR public information officer wrote in the same email on October 3.
County Chairman Paul Livingston has not returned WLTX's multiple attempts to contact him since Friday afternoon.
“Regardless of the path or end result of this process, my continued call as a representative of Richland County is of complete transparency as I firmly believe sunshine is the best disinfectant," Walker said.
County Council Vice Chair Myers did not deny last week's meeting took place.
“It’s no secret to anybody in Richland County that the county has been having conversations with DOR for more than two years," adding she did not think it was, as she called it, "revolutionary."
“We’re always discussing proposals, proposed findings, we’re suggesting things back and forth," Myers said of the County and DOR's discussions regarding the Penny Tax and the litigation between the two.
SCDOR responds
In a statement Monday, the SCDOR also did not deny the meeting took place. But, did not specify what conversations took place, nor if the results of the audit were discussed or presented:
"After the SCDOR provided Richland County with the audit findings in 2016, the County challenged the SCDOR’s authority to audit the Penny Tax Program.
In March 2018, the SC Supreme Court ruled the Department has extensive administrative, oversight, and enforcement responsibilities in the Transportation Act and identified certain expenditures as problematic. The case was sent back to the Trial Court, and in April 2018, the Trial Court issued guidelines for determining whether Richland County’s Penny Tax expenditures comply with South Carolina law.
Since that time, we have been in frequent discussions with Richland County. We have no further comment at this time."
New meeting this Tuesday
Richland County Council will hold a special called meeting on Tuesday, October 22 to discuss the Department of Revenue's update, according to an agenda released Monday. "RC vs. SCDOR - PENDING LITIGATION UPDATE" presented by Chairman Livingston is the main and only item on the agenda.
The agenda was posted on the County's website Monday afternoon.
When WLTX asked why the Council was hosting a special called meeting on Tuesday, if they've been having conversations with DOR for years, Myers downplayed the importance of Tuesday's meeting.
“We have a duty to make people aware. I think you’re reading too much into it," Myers said.
In the meantime, Richland County Council is preparing to take over management of the Penny Tax Program after the contract with the PDT ends on November 3.
On October 1, Council voted to freeze all future management payments to the PDT through the end of the contract as questions over the audit, finances, and other concerns persisted.
At the time, Council members Myers and Chakisse Newton said the freeze was important to protect the County’s options before the contract ends.
