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Questions answered on penny sales tax proposal

Posted: September 28, 2010 1:59 p.m.
Updated: September 29, 2010 5:00 a.m.
Trevor Baratko/C-I

Ricky Tiller (left) answers questions from moderator Lauren FitzHugh during an education forum on the county's proposed 1 percent capital projects sales tax Monday.

Ricky Tiller, Chairman of the Kershaw County Capital Projects Sales Tax Commission, answered prepared questions Monday night at Lugoff-Elgin High School during an education forum for the upcoming capital projects sales tax referendum.

The 8-year tax, if passed, is estimated to fund approximately $28.5 million for projects which will cost overall approximately $37 million.

The ballot question will first ask voters to say “yes” or “no” on allowing Kershaw County Council the right to institute a 1 percent county-wide sales tax. The second question will allow voters to vote on whether to authorize council to take out a bond to pay for the eight projects listed on the ballot, rather than to wait as the revenues are collected over the eight years.

Lauren FitzHugh, retail sales manager for Cromers in Columbia and a Richland County resident, moderated the event, asking Tiller several questions. A paraphrased transcript follows.

Who determined what projects would be on the list?

The capital sales tax commission was composed of six citizens that were appointed by county council (Melissa Emmons, Chuck Nash, Yulee Harrelson, Ted Davis and Larry Heath) …We were given a list of projects and presented them to county council. They were voted on at a public meeting, then there were three readings and the projects were unanimously approved to go on the November ballot.

If approved, when would this extra penny in sales tax go away?

By state law, the sales tax will last for eight years, no extensions or exceptions.

If the referendum passes, can Kershaw County Council change the projects or spend the money elsewhere?

No; state law mandates the projects on the ballot are the only projects that can be funded by this.

Can Kershaw County Council extend the tax after the 8-year period?

State law does not allow any extensions or exceptions.

Can county council increase the sales tax even if the voters reject it?

County council cannot extend a local sales tax without voter approval.

If voters approved the Capital Sales Tax increase to pay for the projects listed on the ballot and also vote in favor of the bond, is county council bound to take the bond to pay for the projects in advance?

No, county council is not required to bond the money. It is up to county council to make that decision. If the projects are approved, then they will have to be either bonded or done in the order listed on the ballot.

What happens if voters reject the proposal?

If voters reject the proposal, the majority of projects listed on the ballot will probably not happen in the foreseeable future.

Can the public pick and choose which projects they wish to vote for/against?

No; the ballot is eight projects, and you have to vote in favor of all eight projects.

What happens if the new sales tax generates more revenue than is needed?

If the sales tax doesn’t generate enough money, the projects will be done as they are listed on the ballot. They are in order, the commission approved the projects, and they are listed on the ballot in our order of preference for completion.

What happens if the new sales tax does not generate enough money?

Our eight-year estimate is very conservative. We were given actual collection numbers from the county administrator. We were very cognizant of not putting a burden on the taxpayers, so we feel our budget is very conservative. But, ultimately, if enough money is not collected by the taxpayers, then county council will decide, and the taxpayers wouldn’t be responsible.

What happens if the voters approve county council to take out a bond to pay for the projects up front and then the sales tax does not generate enough money?

Again, same thing, we have very conservative estimates with those numbers.

The total of our budget was $36,534,000 -- that’s basically eight years with no increase. Those are actual numbers that were collected during 2008-2009. The capital sales tax projects is $28,405,688.

The state charges a 1 percent administrative fee of $365,440. The commission’s intent was to bond these projects so that they would all get started in two years, and not wait eight years. (The) interest cost to borrow $26.5 million for seven years at 4.5 percent, which is more or less the current market rates, would be $5,268,238.

So, if you subtract those three numbers from our total budget, that leaves us a cushion of a little over $2.5 million.

So, again, you can see we were very conservative with our numbers and certainly did not want to put the taxpayers at risk.

Are there any items exempt from the tax?

Two items that are exempt are unprepared food and groceries.

Have studies been done to determine what it will cost to maintain these projects upon their completion and how will those costs be funded?

As part of our process we understood that we didn’t want to put additional burdens on county taxpayers by these projects.

Central Carolina and the S.C. Equine Center can use revenue generated by students or projects.

The three projects that are county-operated -- one is (the) Governor’s Hill infrastructure, there will be no operating or maintenance cost, just maybe some grass cutting, so the taxpayers aren’t at risk

The other two would be the library and recreation (projects). We’ve received information from Amy Schofield, the library director -- the town of Elgin has committed additional funds, and during the process, the county also said they would fund any additional costs, which were expected to be minimal.

The additional maintenance can be funded by grants, users fee. These (recreation) facilities can be used for tournaments and stuff like that, they bring in entry fees. We were comfortable that those fees will help offset the majority of the additional operating cost.

Our committee was very cognizant of not adding operational cost. These are capital projects that once they are built, nothing will be spent. And the operating cost for exposure to county residents will be minimal.

(The "Where the penny would go..." sidebar to this story originally stated a new library would be built in Lugoff. The library would be built in Elgin. The story has been updated to reflect the correction. The C-I regrets the error.)

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