From shortfall to windfall: County officials balance CPST income with rising costs
Greenwood County might hit the $87.9 million revenue cap for the 2016 capital project sales tax early — a far cry from the multi-million dollar shortfall projected just two years ago.
When the penny sales tax passed in a 2016 referendum, voters went to the ballot and approved the tax with a maximum collections cap of $87,938,185 to fund 27 projects throughout the county. Confusion sparked in August 2019, when the late County Council Chairperson Steve Brown said officials expected their final collection rate to be up to $20 million below that projected total.
In fall 2020, County Manager Toby Chappell gave a breakdown of quarterly tax revenues and said that shortfall was down to a $10 million deficit. These projections were based on predicting no increase in collections for the following 20 quarters.
But that’s not what happened.
Some quarters saw the collection rate drop — especially in the summer of 2020 — but others have seen significant growth. Now County Treasurer Steffanie Dorn is predicting the tax will bring in more than originally projected — nearly $1.2 million over.
When initially estimating the tax’s collection, the treasurer at the time, Sharon Setzer, contacted the state Revenue and Fiscal Affairs Office to predict annual tax income from a 1% increase. The office’s estimates in September 2015 are what were used to estimate the $87 million cap in the 2016 referendum voters approved.
Dorn was working for the City of Greenwood when the 2016 shortfall predictions were made. CPST Manager Josh Skinner was hired about six months into the tax’s lifespan to handle execution of the projects.
Skinner keeps a master spreadsheet, started before his hire, where county officials keep a record of each CPST check given to them from the department of revenue. They apply those funds to each project, rolling any leftover funds forward to the next set of projects.
“When we first started, the way we made our projections was we just took the average of our quarterly collections, and sort of add that to each project,” Skinner said. “Of course, that’s what got us in trouble in the beginning, because those averages were $1.9, $1.8 million — they were pretty low.”
These estimates didn’t project growth, and came up dramatically short.
“After COVID, the collections just blew up,” Skinner said, “and then Steffanie started adding projected growth.”
“I’m looking at what we’ve collected every quarter since its inception, and what the growth has been from quarter to quarter,” Dorn said. “I’m very conservative — which, you want your chief financial officers to be conservative, especially in the government sector — but I take where we’ve been and apply that to where we’re going to go.”
Even then, Dorn said she backs off a bit from raw projected growth, and typically presents a more cautious interpretation of these figures. Since 2016, the economy has experienced extremely volatile conditions, which make some quarters worse indicators of future performance than others.
“When I look at this thing, what’s so interesting to me is how in June of ‘20 we had this massive drop, COVID related. Then the next quarter we had this massive increase,” Dorn said. “No, obviously, I wouldn’t take that and apply it to future quarters.”
In her years crunching numbers for Greenwood County and city government, she’s been through several recessions. She knows Greenwood typically lags behind the rest of the country when it comes to economic impact, and takes that into consideration when making her predictions.
If the county hits the $87 million mark noted in the original referendum, Dorn said the state will notify retailers to stop collecting the tax. The county isn’t supposed to collect more than that cap, though Dorn acknowledged there’s usually a delay from when a tax starts or stops and when retailers make the needed adjustments.
But even if the county collects every intended cent, how do officials ensure it will be enough to afford the 27 approved projects?
“When we do the design and the planning, we’re always asking for cost estimates,” Skinner said. “A lot of times the bids will come in high, and we have to either value-engineer — find ways to cut the cost — or find additional money to pay for the overage before we sign the contract.”
Upgrading the J.C. Fox Boozer complex in Ninety Six had a $1 million budget, but the single bid to renovate the athletic facility came in at $1,278,000. That included building a central restroom and concession stand, but Skinner said the county decided to take that building out of the bid and bid it separately.
Officials were able to get the two bids down to $765,000 for the sports complex and $221,000 for the separate building; just less than $1 million. The county used money from its own budget and ARPA relief funds to help pay for additional side projects they requested from the contractors. They chose lower cost materials: Cut back on concrete, using asphalt instead on walkways.
The widening of S.C. Highway 246 was a big example of finding additional funding. The CPST’s budgeted $12 million was never intended to pay for the entire widening of a four-mile stretch of the highway. The county needed to leverage those millions to get additional state or federal funding, and earlier this month they were awarded a $38 million grant from the State Transportation Infrastructure Bank to help with the project.
The county’s boat ramp going in at the Highway 72/221 bridge received $600,000 from the state Department of Natural Resources, supplementing CPST funds to help the project come to fruition. But it also took $200,000 from a state water recreation fund, among other state dollars.
“And of course, we’re spending almost all of it,” Skinner said. “The low bid on that was $1.8 million, so without those extra funds there’s no way we could have built what we’re building now.”
County officials try to set aside a 5 to 10% contingency based on the project’s cost, so they can afford change orders if complications arise. Materials and construction costs are changing constantly, along with inflation, and it’s hard to account for how far today’s dollars might stretch in a year.
In 2016, the allocated $65,000 for Wisteria Park in Troy was budgeted to upgrade the whole park. Today, Skinner said that would probably pay just to renovate the parking lot.
Balancing income and spending is a tall task, rife with complications. But county officials are confident they have the right people for the job.
“We have the best staff there is; Steffanie Dorn is a genius,” County Council Chairperson Chuck Motes said. “She tracks the income of the capital sales tax and reports it to us, and she’s been accurate. Josh is a remarkable manager, too.”
Savings Skinner negotiates help cover costs on other projects, Moates said. While the economic climate is difficult to navigate, and getting more challenging daily, he said the county works to do as much as it can with the funds available.
The county is gearing up to ask its residents to approve another capital project sales tax when this one expires, and Moates said he’s confident it will be an easy sell.
“All I’m going to have to do is say to voters, ‘Look around you,’” he said. “There’s been so much enrichment of our lives and community, with these parks and the sports complex, the utilities work, all the projects.”
Originally Published by Index-Journal on: Sep 24, 2022
By DAMIAN DOMINGUEZ ddominguez@indexjournal.com