Greenwood County could hit the $87.9 million revenue cap for the 2016 capital projects sales tax early — a far cry from the multimillion-dollar shortfall projected just two years ago .
When the penny sales tax was passed in a referendum in 2016, voters went to the polls and approved the tax with a maximum collection cap of $87,938,185 to fund 27 projects nationwide. county. The confusion erupted in August 2019, when the late County Council Chairman Steve Brown said officials expected their final recovery rate to be up to $20 million lower than the projected total.
In the fall of 2020, County Executive Toby Chappell gave a quarterly tax revenue breakdown and said the deficit was reduced to a $10 million deficit. These projections were based on the forecast of no increase in collections for the next 20 quarters.
But that’s not what happened.
Some quarters have seen the collection rate decline – particularly in the summer of 2020 – but others have seen significant growth. Now County Treasurer Steffanie Dorn predicts the tax will bring in more than originally projected — nearly $1.2 million more.
When initially estimating tax collection, then-Treasurer Sharon Setzer contacted the state’s Office of Revenue and Fiscal Affairs to predict annual tax revenue from an increase from 1 %. The bureau’s estimates in September 2015 are those used to estimate the $87 million voter-approved cap for the 2016 referendum.
Dorn was working for the city of Greenwood when the 2016 shortage forecast was made. CPST Director Josh Skinner was hired approximately six months into the tax’s lifespan to manage the execution of the projects.
Skinner keeps a master spreadsheet, started before he was hired, where county officials keep a record of every CPST check given to them by the Department of Revenue. They apply these funds to each project, transferring the remaining funds to the next set of projects.
“When we started, the way we did our projections was that we just took the average of our quarterly collections, and sort of added that to each project,” Skinner said. “Of course, that’s what got us into trouble early on, because those averages were $1.9, $1.8 million — they were pretty low.”
These estimates did not forecast growth and turned out to be dramatically short.
“After COVID, the collections just exploded,” Skinner said, “and then Steffanie started adding projected growth.”
“I look at what we’ve collected each quarter since inception, and what the growth has been quarter over quarter,” Dorn said. “I’m very conservative – what you want your CFOs to be conservative, especially in the government sector – but I take where we are and apply that to where we’re going to go.”
Even then, Dorn said she backtracked a little from projected gross growth and generally presented a more cautious interpretation of those numbers. 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 interests me the most is how on June 20 we had this massive drop, related to COVID. Then the next quarter we had this massive increase,” said Dorn: “No, obviously I wouldn’t take that and apply it to future quarters.”
In her years of crunching numbers for Greenwood County and the city government, she’s been through several recessions. She knows that Greenwood generally lags the rest of the country when it comes to economic impact and takes that into account when forecasting.
If the county hits the $87 million mark listed in the original referendum, Dorn said the state would 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 lag between when a tax starts or stops and when retailers make the necessary adjustments.
But even if the county collects every planned penny, how do officials ensure that it will be enough to fund the 27 approved projects?
“When we do design and planning, we always ask for cost estimates,” Skinner said. “Often the bids will be high and we either have to maximize value – find ways to cut costs – or find extra money to pay the excess before we sign the contract.”
The JC Fox Boozer complex upgrade at Ninety Six had a budget of $1 million, but the one-time bid to renovate the sports facility came in at $1,278,000. This included building a central restroom and a concession stand, but Skinner said the county decided to take that building out of the bid and bid on it separately.
Officials managed to lower the two bids to $765,000 for the sports complex and $221,000 for the separate building; just under a million dollars. The county used money from its own budget and ARPA relief funds to help pay for additional side projects they requested from contractors. They chose less expensive materials: reduce concrete, use asphalt instead of sidewalks.
The widening of SC Highway 246 was a great example of additional funding. CPST’s $12 million budget was never intended to pay for the full widening of a four-mile stretch of the highway. The county needed to leverage those millions for additional state or federal funding, and earlier this month they received a $38 million grant from the State Transportation Infrastructure Bank to help to the project.
The county boat launch to 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 he also took $200,000 from a state water recreation fund, among other state dollars.
“And of course we spend almost everything,” Skinner said. “The lowest bid was $1.8 million, so without those extra funds, we would never have been able to build what we’re building now.”
County officials are trying to set aside a 5-10% contingency depending on the cost of the project, so they can afford to change orders if complications arise. Building materials and costs are constantly changing, along with inflation, and it’s hard to explain how far today’s dollars could stretch in a year.
In 2016, the $65,000 allocated to Wisteria Park in Troy was budgeted to upgrade the entire park. Today Skinner said it would probably pay just to renovate the parking lot.
Balancing income and expenses is a daunting task, fraught 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 Chairman Chuck Motes said. “She tracks capital sales tax revenue and reports it to us, and she has been accurate. Josh is also an outstanding manager.
Savings Skinner is negotiating aid to cover the costs of other projects, Moates said. Although the economic climate is difficult to manage and is getting more difficult every day, he said the county is trying to do as much as it can with the funds available.
The county is preparing 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 will have to do is tell voters, ‘Look around you,'” he said. “There’s been so much enrichment to our lives and our community, with these parks and the sports complex, the public works, all the projects.”
Contact editor Damian Dominguez at 864-634-7548 or follow on Twitter @IJDDOMINGUEZ.