Can Charleston voters approve using Transportation Sales Tax funds to build the Battery Extension, a $300M project that is mostly described as flood control, even though TST funds are supposed to pay for transportation projects?
Plain-English summary
Charleston Mayor William Cogswell asked the AG whether the Battery Extension project, a roughly $300M flood-control infrastructure project on the Charleston peninsula, can be funded with Transportation Sales Tax (TST, also called "Penny Tax") funds if voters approve. Critics, including a Post and Courier editorial, argued the project is "primarily for drainage" and shouldn't qualify as a "transportation" project. The AG's office disagreed.
The opinion's logic stacks cleanly:
- The TST statute itself (§ 4-37-30(A)(1)(a)(i)) explicitly lists "highways, roads, streets, bridges, mass transit systems, greenbelts, and other transportation-related projects facilities including, but not limited to, drainage facilities relating to the highways, roads, streets, bridges, and other transportation-related projects."
- A 1970 AG opinion concluded that flood control on city streets is "an integral part of transportation operation" and that local-government funds can be expended on flood-prevention projects.
- The Court of Appeals' 2021 S.C. Pub. Int. Foundation v. Richland County decision read TST authority broadly: "operating" transportation-related projects is a permissible use, not just capital construction.
- The S.C. Supreme Court's 2018 Richland County v. SCDOR set the outer boundary: TST funds must be "tethered to a specific transportation-related capital project."
The Battery Extension protects three of Charleston's most-flooded peninsula streets (Lockwood, Morrison, East Bay) from tidal and storm-driven flooding. The opinion concludes a court would likely accept that segment of the project as funded by a county TST. The opinion notes it does not opine on whether the project should be adopted; that is a vote for Charleston County voters.
What this means for you
If you live in Charleston County and will vote on the 2026 TST referendum
The legal question (can TST funds be used for the Battery Extension's protective segment?) is reasonably settled. The political question (should they?) is up to the voters. This opinion does not direct anything about whether voters should approve. It just says the underlying use is legally permissible if voters approve.
If you are a Charleston County or City of Charleston official
You can move forward with including the Battery Extension's protective segment in the 2026 TST referendum. Confirm:
- The ordinance authorizing the referendum specifies the project (or projects) clearly enough.
- The expenditure is tethered to a transportation-related capital project (Lockwood, Morrison, East Bay flood protection that keeps roads safe and passable).
- The TST funds will not be used for ineligible parts of the broader Battery Extension (e.g., purely recreational features that lack a transportation nexus might face more scrutiny).
If you are a municipal attorney or resilience planner in another S.C. county
This opinion is a strong template. If your county is contemplating a TST that includes flood-control or sea-level-rise infrastructure protecting roads, you can cite this opinion to support TST eligibility. Three guideposts:
- Drainage relating to roads is expressly authorized. Section 4-37-30(A)(1)(a)(i) explicitly includes drainage facilities related to transportation projects.
- Operating costs are eligible. Per Richland County (2021), "operating" transportation-related projects is a permitted use.
- Capital project nexus is required. Per the 2018 Supreme Court decision, the expenditure must be "tethered to a specific transportation-related capital project."
If you are an opponent of the Battery Extension
This opinion does not foreclose your case. The AG explicitly says it "is an analysis of the law and not a comment upon whether this project should or should not be adopted." If your concerns are environmental, financial, or about the project's design, those are voter questions. The legal eligibility issue is largely settled.
If you are a journalist covering the referendum
The Post and Courier editorial that the opinion quotes ("the primary purpose of the Battery Extension project is drainage") sets up a useful tension. The AG opinion essentially says: yes, the primary purpose is drainage, but drainage that protects roads is a permissible use of transportation tax dollars under § 4-37-30(A)(1)(a)(i). Both can be true at once.
Common questions
Q: What is the Transportation Sales Tax (TST)?
A: A local-option sales tax authorized by S.C. Code § 4-37-10 et seq. Counties may impose up to 1% sales tax for transportation projects, subject to a referendum.
Q: What does "transportation-related project" cover?
A: The statute includes highways, roads, streets, bridges, mass transit systems, greenbelts, and "other transportation-related projects facilities including, but not limited to, drainage facilities" relating to those projects. The Court of Appeals has read this broadly.
Q: Why do drainage facilities count?
A: Because road flooding is a transportation problem. Charleston has had over 1,200 closures of Lockwood, Morrison, and East Bay in five years due to flooding. Protecting those roads from flooding is functionally road infrastructure.
Q: Can TST funds be used for non-transportation parts of a project?
A: The opinion limits eligibility to the protective segment that relates to road flooding. The AG explicitly notes the proposal is "to use TST funds only on the portion of the Battery Extension that directly protects Lockwood, Morrison and East Bay Streets." Other portions of the broader Battery Extension (linear park, pedestrian path) would have to find other funding (city, state, private, federal).
Q: What if voters reject the referendum?
A: Then the TST is not imposed and the City must find other funding. The AG opinion is contingent on voter approval.
Background and statutory framework
The Transportation Sales Tax Act (S.C. Code § 4-37-10 et seq.) gives counties an optional method to fund transportation infrastructure through a local-option sales tax. Section 4-37-30(A)(1)(a) sets out what an authorizing ordinance must specify, including the projects to be funded. Sub-item (i) lists eligible project types, including "drainage facilities relating to the highways, roads, streets, bridges, and other transportation-related projects."
The leading judicial interpretation is the Court of Appeals' 2021 decision in S.C. Pub. Int. Foundation v. Richland County. That case held that TST funds may pay for "operating" transportation-related projects (in that case, the continued operation of a mass transit bus system), not just capital construction. The Court of Appeals quoted the legislative findings and held the statute "authorizes spending on operating transportation-related projects."
The Supreme Court's 2018 decision in Richland County v. S.C. Department of Revenue sets the boundary in the other direction: a "proper expenditure of Penny Tax funds must be tethered to a specific transportation-related capital project or the administration of a specific transportation project." That requires a concrete nexus, not free-floating spending.
The 1970 AG opinion (1970 WL 12114) is a useful early data point. It concluded that city, county, and state funds could be jointly expended on a flood-control project for Aiken streets because flood prevention is part of road maintenance. The opinion's logic translates directly to the TST framework.
Citations and references
Statutes:
- S.C. Code § 4-37-10 et seq. (Transportation Sales Tax)
- S.C. Code § 4-37-30 (county imposition; eligible projects)
Cases:
- S.C. Pub. Int. Foundation v. Richland County, 436 S.C. 271, 871 S.E.2d 599 (Ct. App. 2021) (operating costs eligible)
- Richland Cnty. v. S.C. Dept. of Revenue, 422 S.C. 292, 811 S.E.2d 758 (2018) (capital project tether required)
Prior AG opinions:
- Op. S.C. Atty Gen., 1970 WL 12114 (Jan. 14, 1970) (flood control on streets is integral to transportation)
- Op. S.C. Atty Gen., 2007 WL 655622 (Feb. 16, 2007) (TST framework summary)
Source
- Landing page: https://www.scag.gov/opinions/opinions-archive/opinion-on-eligibility-of-battery-extension-project-for-charleston-county-transportation-sales-tax-funding/
- Original PDF: https://www.scag.gov/media/fnbccykw/cogswell-final-4-9-26.pdf
Original opinion text
Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.
ALAN WILSON
ATTORNEY GENERAL
April 9, 2026
William S. Cogswell Jr., Mayor
City of Charleston
180 Lockwood Boulevard, Suite C
Charleston, SC 29403-5121
Dear Mayor Cogswell:
You seek our opinion regarding use of "Transportation Sales Tax" funds. By way of background, you state the following:
[t]he Battery Extension project is a critical infrastructure initiative and one of the city's highest priorities for potential funding as part of Charleston County's 2026 Transportation Sales Tax referendum. This project is a key component to keeping water off our roads, and it will address systemic problems that adversely impact our safe navigation of city streets. The project is intended to address longstanding transportation challenges on the Charleston peninsula by improving connectivity, enhancing mobility, and strengthening reliance during flooding events. Given its anticipated long-term public benefits, the project is central to the City's broader transportation and resilience strategy.
The City has been working closely with Charleston County officials to identify and refine projects for possible inclusion in the 2026 referendum, and they are supportive. We have also engaged with the South Carolina Department of Revenue, and they were in agreement that transportation sales tax funds could be used for a project of this nature.
Considering this feedback, and to ensure full compliance with applicable state laws, we seek your office's guidance on whether the proposed Battery Extension project meets the legal criteria for inclusion in and funding through a county transportation sales tax program.
The materials you have submitted argue that "the Battery Extension is an appropriate use of TST funds." Your materials submitted state the following:
... Lockwood, Morrison and East Bay have experienced an estimated 1,238 closures over the last five years due to heavy rainfall and tidal flooding. About 70% of our major tidal flooding events have occurred in just the past 10 years, and these events are projected to triple over the next 25 years.
... In addition to keeping key roads safe and passable during flooding events, the Battery Extension is designed to function 365 days a year as a linear park with pedestrian and bike path, improving connectivity between West Ashley, the broader region, and the entire peninsula.
The Battery Extension will create approximately five miles of public waterfront access.... We propose using TST funds only on the portion of the Battery Extension that directly protects Lockwood, Morrison and East Bay Streets.
The approximate local cost for this protective segment is $300M....
City, state, and private dollars will fund the remaining local match for the project, helping unlock nearly a billion dollars in federal funding.
On the other hand, we understand that there has been considerable concern expressed as to whether the Battery Extension project would qualify for funds from the Transportation Sales Tax. The concern, as we understand it, is that the project is primarily for "drainage" rather than a "transportation" project. See Editorial, Charleston Post and Courier, Sept. 13, 2025 ["And there's no question that the primary purpose of the Battery Extension project is drainage."].
It is our opinion that a court would most probably conclude that the proposed use of Transportation Sales Tax funds is lawfully authorized as a "transportation-related project," should the voters choose to vote in favor thereof.
Law/Analysis
Long before the passage of the Transportation Sales Tax Act (§ 4-37-10 et seq.) former Attorney General McLeod issued an opinion regarding the propriety of expending public funds for control of flooding of city streets. While the opinion does not, of course, deal with your question directly, it is instructive. In Op. S.C. Atty Gen., 1970 WL 12114 (January 14, 1970), General McLeod addressed the question of flooding in the City of Aiken and a project "undertaken jointly by the county, city and state Highway Department to undertake flood control measures.... Each governmental unit will contribute one third of the cost of the flood control project."
The question posed to the Attorney General was "whether the city, county and state may lawfully expend public moneys for this purpose in the manner proposed." According to General McLeod,
I advise that, in the opinion of this office, the expenditure of county funds and state funds, as well as city funds, is clearly authorized for this purpose. Each governmental unit has authority to expend funds for the maintenance of roads and streets, and the project proposed appears to come clearly within the scope of each political subdivision. The Supreme Court of South Carolina has recently recognized that the state, counties and cities may cooperatively enter into ventures which they are authorized to undertake.
In short, the opinion recognized that flood control is an integral part of transportation operation. Implicitly, the opinion concluded that flood prevention is a part of the upkeep of city streets.
With this background in mind, we turn now to the use of Transportation Sales Tax funds. The Transportation Sales Tax is authorized at § 4-37-10 et seq.
In Op. S.C. Atty. Gen., 2007 WL 655622 (February 16, 2007), we discussed the purpose of this Tax as follows:
Chapter 37 of Title 4 of the South Carolina Code provides optional methods for financing transportation facilities. S.C. Code Ann. §§ 4-37-10 et seq. (Supp. 2005). Section 4-37-30 affords counties the ability to impose a sales and use tax or tolls to finance the costs of highways, roads, streets, bridges and other transportation-related projects. This provision provides as follows:
To accomplish the purposes of this chapter, counties are empowered to impose one but not both of the following sources of revenue: a sales and use tax as provided in item (A) or to authorize an authority established by the county governing body as provided in Section 4-37-10 to use and impose tolls in accordance with the provisions of Item (B):
(A) Subject to the requirements of this section, the governing body of a county may impose by ordinance a sales and use tax in an amount not to exceed one percent within its jurisdiction for a single project or for multiple projects and for a specific period of time to collect a limited amount of money,
Our opinion continued to quote from the statute as follows:
(1) The governing body of a county may vote to impose the tax authorized by this section, subject to a referendum, by enacting an ordinance, The ordinance must specify:
(a) The project or projects and a description of the project or projects for which the proceeds of the tax are to be used, which may include projects located within or without, or both within and without, the boundaries of the county imposing the tax and which may include:
(i) Highways, roads, streets, bridges, mass transit systems, greenbelts, and other transportation-related projects facilities including, but not limited to, drainage facilities relating to the highways, roads, streets, bridges, and other transportation-related projects;
(ii) Jointly-operated projects, of the type specified in sub-item (i) of the county and South Carolina Department of Transportation....
The decision of the Court of Appeals in S.C. Pub. Int. Foundation et al. v. Richland County, et al., 436 S.C. 271, 871 S.E. 2d 599 (Ct. App. 2021) is particularly instructive with respect to the purpose of the Transportation Sales Tax legislation. In that case, the question was whether it was lawful to use Transportation Sales Tax funds to fund the continued operation of a mass transit bus system. It was argued that Penny Tax funds could only be used for the bus system's "capital expenditures," not its continued operation. According to the argument, "capital costs" were one time costs for infrastructure.
The Court of Appeals disagreed. According to the Court, legislative findings for the Act's passage allowed counties to finance the costs of "acquiring, designing, constructing, equipping and operating highways, roads... and other transportation-related projects." 436 S.C. at 275, 871 S.E. 2d at 601 (emphasis in original).
Thus, the Court concluded that "we agree with the circuit court that the statute's language authorizes spending on operating transportation-related projects...." (emphasis added). Accordingly, based upon this decision, Penny Tax funds may be spent to aid in the "operation" of "transportation-related projects." This would likely include the support and "operation" of present streets and roads through the use of a flood control project.
As our Supreme Court advised in Richland Cnty. v. S.C. Dept. of Revenue, 422 S.C. 292, 311-12, 811 S.E. 2d 758, 768 (2018),
[i]t is axiomatic that the county's ordinance may not expand the scope of expenditures authorized in the enabling provisions of the Transportation Act, which requires a nexus between expenditures and a transportation-related capital project. (citing § 4-37-10 (A)(1)(a)-(c)).... A proper expenditure of Penny Tax funds must be tethered to a specific transportation-related capital project or the administration of a specific transportation project. (emphasis added).
Based upon the information you have provided, it is our opinion that a court would most probably conclude that the Battery Extension Project likely meets this test.
Conclusion
In our opinion, a court would likely conclude that Transportation Sales Tax funds could be validly used for the Battery Extension project, as described in your letter, should the voters approve in November. As Attorney General McLeod recognized, expenditure of funds for a flood control project, designed to minimize flooding on existing roads and streets, is valid. And, as the Court of Appeals concluded in Richland County, expenditure of Transportation Sales Tax funds for a bus system's continued operation is lawful because one of the purposes of the Tax is to support the "operation" of "transportation-related projects." County Council (and the voters, if they agree) would determine that flood control is part and parcel of the existing "operation" of city streets. In our opinion, such would constitute a "transportation-related project." Thus, a court could well conclude, based upon these authorities, that these funds may be used to support the operation of present streets and roads through the avoidance of flooding. Of course, our opinion is an analysis of the law and not a comment upon whether this project should or should not be adopted.
Robert D. Cook
Solicitor General