Charleston County cannot collect an additional
half percent sales tax beginning next month as planned, the South Carolina
Supreme Court has ruled.
In an order Monday, the Supreme Court halted collection until it
decides whether the sales tax is legal. The decision will postpone
collections at least a month.
Opponents of the sales tax, claiming Charleston County botched last
November's referendum in which the tax narrowly passed, had asked the
court to block collection until a final court decision.
The sales tax would actually be paid to the S.C. Department of Revenue,
which would return the money to the county, minus administrative costs.
The department last month told businesses to begin collections on May 1.
If people begin paying the higher tax on that date, the state and
county would have no way to accurately issue refunds if the court later
ruled the tax illegal, the opponents argued.
"We are pleased that we had this opportunity to assist the county in
doing the right thing," said Trent Kernodle, an attorney who represents
several sales tax opponents.
The decision throws into question a $3.5 million loan obtained by the
Charleston Area Regional Transportation Authority to continue operating.
The public transit system is counting on sales tax proceeds to pay off the
loan.
CARTA Director Howard Chapman has said the agency has begun to draw
loan money, but it's unclear if it would default on the loan if tax
collections were delayed.
Chapman said Monday that he wouldn't comment until he could
independently verify the court decision.
In the decision, the high court said it is halting collections to avoid
irreparable injury to the opponents or a miscarriage of justice.
Such an action is warranted, "where it is likely that the appellant
will succeed on the merits of the case," the court said, referring to the
lawsuit brought by sales tax opponents.
Kernodle interpreted that to mean that opponents have at least a 50-50
chance of winning.
County Attorney Joe Dawson could not be reached for comment Monday.
County Council Chairman Tim Scott also could not be reached.
Council members are scheduled to discuss later this week the way in
which sales tax money for road and bridge improvements would be allocated.
Voters approved the half-cent sales increase in November by a margin of
865 votes out of nearly 100,000 cast. Over the 25 years it would be in
effect, the tax would raise an estimated $1.3 billion, paying to run
CARTA, build new roads and bridges and purchase parkland and forests for
preservation.
County Council has also committed $75 million in sales tax money as the
local share of the cost to build a new Cooper River bridge.
Meanwhile, the cities of Charleston, Mount Pleasant and North
Charleston are planning to join Charleston County's legal battle to defend
the sales tax referendum.
The mayors of the three cities heavily promoted the tax.
Members of the councils of each of the three cities, however, are among
the more than a dozen local elected officials who have sued the county
over the referendum.
These officials claim the tax passed because of the wording County
Council members chose to put on the ballot and because of fliers produced
and distributed by county employees at polling places without council's
knowledge or authorization.