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County Council Meeting May 10

Finance Committee ponders some more over sales tax use
Concern over citizens' reaction
Warwick Jones, standing in for Shawn Keller who is on military duty in Iraq

As anticipated, the County Administrator, Roland Windham made his presentation to the Finance Committee yesterday on the use of the sales tax proceeds. It really did not break any new ground. What the Committee was looking for was some guidance as to how much of the proceeds of the sales tax could be diverted to Public Works to fund projects already under consideration. Mr. Windham did not give a definitive answer nor was it his to give really. This was the responsibility of Mr. Joe Dawson the County Attorney. He stated at a meeting last week and again yesterday that in his opinion, virtually all the projects relating to roads and drainage - the major part of Public Works - would qualify for consideration

After acknowledging that it was not his task to make policy, Mr. Windham cautioned the Committee on drawing on any substantial amount of sales tax funds to finance Public Works. He said that this could send a bad signal to voters as this action had not been mentioned in the sales tax referendum. He suggested that the Committee consider using only $1 million this year from the sales tax proceeds to finance work on County roads. There were 17 projects ready to go that could be financed with these funds. He also noted that the County's Contingency Fund was very low and that $250,000 should be shifted from funding for Public Works to the Fund. Amongst other items, some legal and litigation costs would absorb the present small balance in the Contingency Fund.

Change in accounting to allow some budget increases
Mr. Windham further suggested that if Council wished to avert an increase in property taxes and to meet requests for increased financing of certain departments or agencies, then it should look to "recovering" the $3 million it had paid earlier in the year as part of its share of financing the Cooper River Bridge. This money was paid to the State and came from the General Fund. Mr. Windham argued that the expense for the bridge could have legitimately come from the sales tax. There was no legal reason why the accounting could not be amended and for the payment to the State be "financed" or debited against the sales tax, and the General Fund be credited with $3 million drawn from the sales tax proceeds. The Committee later in the proceedings accepted this proposition. It also allowed the Committee to vote to increase the budgets of the public defender and other bodies by a total of over $700,000 for this year. It might also allow the Committee to look more favorably on other small budget increases later this week.

The recovery of the $3 million and the easing of pressure on the Fiscal 2006 budget have not resolved the issue of the diversion of sales tax proceeds to Public Works. Mr. Windham was again asked to prepare another presentation but this time to find out the cost of administering the sales tax collection and spending. This was considered a legitimate cost that the County could look to recover from the sales tax and not impinge on the law or citizens' sensibility.

Feeling of unease
Although it seemed that the majority of Committee members had sympathy with the prospect of diverting sales tax funds to Public Works, most had a feeling of unease. So did some of the mayors of the cities in the County who expressed displeasure with the move to Mr. Windham and Council Chairman Stavrinakis. Council member Fava suggested that the County should wait for a period to gain some experience with the collection and application of the tax. Council Chairman Stavrinakis very forcefully opposed the diversion of tax funds to Public Works. It would be badly interpreted by voters and would "send a bad message. It was the wrong first step!"

Council member Scott was the most vociferous and aggressive in his support for diverting funds. At a meeting last week, he suggested the possibility of diverting $4 million this year and looked for a possibility of diverting more in future though not necessarily for Fiscal 2006. He took issue with the suggestion of Mr. Windham that mayors' concern was a barometer of citizen's feelings. He said that Council with its move to single member districts was just as capable of being a barometer of citizens' concern. He said that he was very much opposed to raising property taxes. The sales tax and the possibility of financing much of Public Works with the sales tax proceeds would take pressure off property taxes. He said that road works had been delayed too long. The wait for resurfacing was now 12 years in the County.

Details of projects need to be given
Council member Darby probably jolted a few nerves when he reminded the Committee that it had an obligation to reveal details of all projects that were proposed to be financed by the sales tax. Chairman Stavrinakis was quick to point out that all details would be revealed and that the Transportation Oversight Committee would review the projects. This was pleasing because for most of the discussion that preceded Council member Darby's question, it seemed that the committee did not exist. But what Chairman Stavrinakis did not say and which he and the Finance Committee must know, is the that this is at the heart of the issue that Council member Joey Douan has with the sales tax referendum. It is the basis of his suit now waiting to be heard.

In Councilmember Douan's opinion, the referendum wording flies in the face of South Carolina Law. Here is the relevant paragraph extracted from the SC Government web site. Viewers can draw their own conclusion. The critical phrases are in Bold.

The contentious wording of the Law
Title 4 Section 37 -30 of SC Law deals with the sales and use taxes as revenue for transportation facilities. Paragraph A1 reads as follows " the governing body of a county may vote to impose the tax authorized by this section subject to a referendum enacting ordinance. The ordinance must specify:
A. The project or projects and a description of the project and projects for which the proceeds of the tax are to be used which may include projects located within or without or both within and without the boundaries of the County imposing the tax and which may include highways, bridges" etc.

Council member Douan argues that the law states that project details should be given at the time of the sales tax referendum. Only those projects that were specifically named in the referendum documents should be financed from the sales tax. Projects that were specifically named in the referendum documents accounted for about $113 million and were to be financed by bonds to be repaid from the sales tax proceeds. Council member Douan would further argue that Council should hold referendums on all projects to be financed by a sales tax and the Council did not have a right to write an open check for itself for funding projects in future that had not been identified.

What list of projects?
Council member Scott alluded to a longer list of projects that had been identified and beyond those that made the referendum papers. We don't take issue that there was such a list. But we will take issue that the public was aware of it. If the public were aware of it, the question is begged as to why Council needed to create an oversight committee. After all, the purpose of the oversight committee is to ensure that projects proposed by the County pass scrutiny by citizens. If they were noted in the referendum, why do they need scrutiny?

We confess to voting against the sales tax in the referendum. Our stance was not opposition to its objective; it was the open-ended ness of the tax. But much has passed now and we are reconciled to its existence, and the damage that could be caused by its repeal. We have some issues with CARTA but recognize the strong need for a public bus service. But having said that, we think that Council member Douan's suit has some merit. Whether it will succeed or not we do not know.

We doubt voters will be happy with diversion of sales tax funds
But what we are certain about is that voters did not vote yes in the referendum for the sales tax to finance all or most Public Works - of the County or the Cities. Implied, in this writer's opinion, were only large capital projects that required major funding. The tax was for spending on major infrastructure not minor roads and drainage. We agree with Council members who think that Council should move very slowly, if at all, along the path of diverting sales tax funds for Public Works. And after all, the Transportation Oversight committee has yet to have its first meeting.

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