Chappell: CPST unlikely to come up $20M short
We don’t know.
That was the assessment given Tuesday by Greenwood County Manager Toby Chappell to council members about how much money might be raised during the next six years when a 1-cent sales tax assessment to pay for millions of dollars worth of capital projects sunsets.
But, Chappell said, officials are confident the final tally will be closer to an $87.9 million figure included on 2016 ballots than a possible $67 million performance, which would sideline 10 of 27 planned projects.
“When someone tries to say the capital project sales tax will be a specific amount short, the best case is that they’re giving you an educated opinion, the worst case is that they’re merely speculating,” Chappell said in his first public comments on the issue since an Aug. 28 State of the City/County forum where County Council chairman Steve Brown disclosed that actual collection rates are falling behind projected amounts.
That same afternoon, Josh Skinner, the county’s CPST coordinator, said based on averages from eight quarters worth of revenues, the penny sales tax might generate a total of $67.9 million.
The Index-Journal published a nearly 6,000-word account on the CPST issue in its Sept. 8 edition and received no correspondence from county leaders or other officials close to the initiative disputing the newspaper’s reporting.
Chappell gave the County Council an “extraordinarily numbers heavy” presentation where he responded to the newspaper’s report, based on the potential $20 million gap.
“The number $20 million has been thrown around in the media recently. Is it possible that the 2016 capital project sales tax will be $20 million short in 2025? The short answer is yes. However, it’s also possible that you win the South Carolina Powerball at 1 in 292 million odds, and it’s possible that FERC may approve our fuse plug issue, but it’s not likely,” Chappell said.
For such a shortfall to take place, “you’d have to have catastrophic economic events to occur, none of which the county knows of or anticipates.”
To date, $17.52 million has been raised since the tax took effect on May 1, 2017.
So how did the county come up with the $87.9 million figure that went to referendum in November 2016?
Two dates in September 2015, plus the final year outcome of a 2007 capital project sales tax answer that question, Chappell said.
In August 2015, county leaders asked the state’s Office of Revenue and Fiscal Affairs for a projection of how much Greenwood could collect through a second penny sales tax.
On Sept. 10, the office responded with an estimate of $5.81 million in first-year collections.
But since Greenwood County brought in $8.4 million worth of sales tax dollars in 2010 through a 2007 penny tax initiative, officials asked for a second look at the numbers.
And on Sept. 30, 2015, Chappell said, the state came back with an updated projection of $9.5 million.
Extrapolating that across eight years, Chappell said, gave the county a baseline figure of $76 million.
As a hand-picked committee waded through applications, the costs of projects making the cut were recalibrated to take into account inflation and annual growth, adding about $11 million to the number, for a cap of $87.9 million.
For the county to perform at a clip that ends with only $67.9 million being realized, it would mean zero growth for the remaining life of the collection.
“If you wanted to believe that we would be $20 million short, this is the math that gets you there,” Chappell said.
But since Year 1 to Year 2 revenues jumped by $624,000 — that theory has already been proven faulty, Chappell said.
However, county leaders themselves were using the $67.9 million figure as recently as August. According to minutes from an Aug. 8 Greenwood Commissioners of Public Works meeting, General Manager Jeff Meredith said he received a “formal letter” that week from Skinner saying the last projects on the list — placement of lines for water service and fire suppression to be installed at Harris Landing and along U.S. Highway 25 — wouldn’t be funded.
Meredith provided a copy of the letter to the Index-Journal.
“Greenwood County receives the sales tax revenue from the S.C. State Treasurer on a quarterly basis and we are currently averaging $2,190,414 per quarterly check … Based on our quarterly average, we are projecting to collect $67,902,834 at the end of our eight year time limit,” the letter says.
Several members of the County Council said they took issue with the Index-Journal’s reporting on the matter following Chappell’s update.
“To anyone who can read and hear logic, this makes perfectly good sense, and it’s a shame that we’ve had to deal with this turmoil, but I appreciate you addressing it in such a professional and dignified manner and I hope it will be reported as such,” County Council member Chuck Moates said.
Theo Lane, who was chairman of the Capital Project Sales Tax economic development committee and advocacy chairman for the Greenwood SC Chamber of Commerce in 2016, also was upset by the Index-Journal’s CPST reporting.
Lane was elected to the County Council on the same ballot the CPST question appeared on.
He said he took “personal offense to the way this has been portrayed.”
“I know how transparent this council has worked to be, I know that we are working in the best interests of Greenwood County as we always have. I’m proud of that work. We aren’t perfect, we sometimes make mistakes, there are a couple of things we wish we had done differently, but I honestly think it’s easy to armchair quarterback in the aftermath,” Lane said. “We’re honest, we function with integrity and we work for the best interest of the people of Greenwood County.”
Brown said up-to-date accounting numbers for 2016 capital project sales tax collection rates will be posted on the county’s website. He also acknowledged that officials should have presented information on the revenue generation more quickly.
“It’s been pointed out very plainly to us that we should have periodic updates. We ask for your forgiveness on that faux pas and will correct it in the future,” Brown said.
Brown said on Tuesday that Chappell alerted the County Council via email on June 19 that anticipated CPST collections might be lagging behind expectations — information he felt obligated to share at the August luncheon, where many leading business and civic leaders who support the tax’s adoption were in attendance.
“If I had sat on that information for a two- or three-year period, and the collections had not responded in a positive manner, then I think I would have been wrong,” Brown said. “I think we are moving in a positive manner, I think we are going to see improvements in the collection rate and I think a majority of the projects will be funded. There are no funds missing, every project that is supposed to be funded to this day is funded at a 100% level and we’re just hoping the money will continue to rise. I wish we were perfect but we’re not, and we’re trying to do the best we can.”
Originally Published by Index-Journal on: Sep 17, 2019
By ADAM BENSON abenson@indexjournal.com