What can a South Carolina county spend its local 'transportation penny' sales-tax revenue on, and what's off-limits?

Plain-English summary

South Carolina Revenue Ruling #22-2 tells counties how they may — and may not — spend the revenue from a local transportation sales-and-use tax (often called the "transportation penny" tax). It's not about whether a purchase is taxable; it's a spending-rules guide the Department uses when advising counties and when auditing how they use the money.

Where the tax comes from. Under the Optional Methods for Financing Transportation Facilities Act (Title 4, Chapter 37), a county's governing body may — by ordinance and voter referendum — impose a sales-and-use tax of up to 1% for a single project or multiple projects, for a set period, to collect a capped amount (§ 4-37-30(A)). The imposition ordinance must name the projects and their estimated capital costs. The Department collects the tax like any other sales tax; it goes to the State Treasurer, is held in a fund separate from the general fund, and is distributed quarterly back to the county — to be used only for the purpose stated in the ordinance (§ 4-37-30(A)(8), (15)).

The controlling rule — everything must be "tethered." In Richland County v. S.C. Department of Revenue (2018), the South Carolina Supreme Court held that transportation-tax proceeds must be used for the capital costs of the transportation projects identified in the Act, and that a proper expenditure "must be tethered to a specific transportation-related capital project or the administration of a specific transportation project." The Court confirmed the Department's authority to audit county spending for compliance. RR #22-2 turns that holding into working guidelines.

"Capital costs." Expenditures treated as capital under GAAP — planning, acquiring, constructing, or improving property with a useful life over one year (land, buildings, vehicles, equipment, infrastructure, and even intangibles like long-lived software), including costs that increase an asset's value or extend its life. Capital costs split into direct and indirect costs.

Eligible costs. Must be reasonable, ordinary and necessary, market-priced/arm's-length, lawful, and consistent with the county's fiduciary duties:

• Direct costs — chargeable to a capital asset account: the purchase price of land/structures, construction payments, direct labor, materials (asphalt, concrete, steel, wiring, piping), equipment used in construction (incl. lease payments and depreciation), site preparation (demolition, environmental remediation, utility relocation), engineering/architectural/design, permits, licenses, bonds, easements, rights-of-way, project-specific legal/accounting fees, inspection, interest on project debt until the project is "placed in service," debt service (and issuance costs) on project bonds, public-engagement/information fees tied to a project, and mitigation credits required to offset a project's ecological impact.
• Indirect costs — only the project-related portion, proportionally allocated: e.g., the share of an employee's salary/benefits spent administering projects, licensure/continuing-education for licensed transportation-department staff, ordinary operating expenses of a transportation department devoted to the tax program, and a labor-based allocation of a "mixed service" department's costs.
• Mass transit systems — uniquely, eligible costs include not just capital items but the day-to-day operation of the system (acquisition, design, construction, equipping, and operating), plus expenditures needed to meet federal/state requirements — so long as they're tethered to the system, consistent with the ordinance and referendum, and reasonable and not excessive.

Ineligible costs (anything not tethered to a project or its direct administration, or that's excessive/unreasonable): routine road/bridge maintenance, countywide programs supporting all of county government, general county overhead and normal cost of doing business (finance, procurement, HR, executive management) except where done exclusively for the transportation department, conflict-of-interest payments (§ 8-13-700), mentor/apprenticeship or constituent-benefit programs, legal fees for litigation over alleged improper spending, professional fees not tied to a project, and duplicative costs.

Who to contact. The Department's Compliance Audit Section handles local-sales-tax audits; questions go to [email protected].

What this means for you

County officials, finance departments, and transportation programs

This is your spend-it-right checklist. Every dollar of transportation-tax revenue must map to a capital cost of a project named in your imposition ordinance (or that project's administration). Build your allocation methodology now — especially for indirect and mixed-service-department costs — because the Department audits for exactly this, and untethered, overhead, or routine-maintenance spending will be flagged as ineligible. Note the mass-transit exception: operating costs are eligible there, but nowhere else.

Accountants, auditors, and municipal advisors

The analytical spine is Richland County (2018) plus the GAAP "capital costs" definition. When reviewing a county's use of the tax, test each expenditure against the tethering requirement and the direct/indirect/mass-transit framework, and watch the enumerated ineligible categories (routine maintenance, general overhead, cost-of-doing-business, conflict-of-interest, and litigation-defense fees). Document proportional allocation methods for indirect costs.

Businesses and residents

If you live or operate in a county with a transportation-penny tax, this ruling is why that revenue can fund road, bridge, and transit projects but not the county's general operations or routine upkeep. It doesn't change what you pay at the register — it governs how the county may use what's collected.

Common questions

Q: What is the local transportation ("penny") tax?
A: A sales-and-use tax of up to 1% that a county may impose by ordinance and voter referendum under Title 4, Chapter 37, to fund specified transportation projects for a limited time and amount.

Q: What can the revenue be spent on?
A: Only the capital costs of the transportation projects named in the imposition ordinance (highways, roads, streets, bridges, mass transit, greenbelts, related facilities) or the administration of a specific project — every expenditure must be "tethered" to a specific project.

Q: Can it be used for routine road maintenance or general county overhead?
A: No. Routine maintenance, countywide/general programs, and ordinary county overhead or cost of doing business are ineligible, except overhead incurred exclusively by the county transportation department for the projects.

Q: Is mass transit treated differently?
A: Yes. For mass transit systems, eligible costs include day-to-day operating costs, not just capital costs — provided they're tethered to the system, consistent with the ordinance and referendum, and reasonable.

Q: Who enforces this?
A: The Department of Revenue, which the SC Supreme Court confirmed may audit county spending of the tax (Richland County v. SCDOR, 2018). Its Compliance Audit Section can be reached at [email protected].

Citations and references

Statutes:

• S.C. Code Ann. Chapter 37, Title 4 — the Optional Methods for Financing Transportation Facilities Act (attached to the ruling)
• S.C. Code Ann. § 4-37-30(A) — a county may impose up to a 1% transportation sales-and-use tax
• S.C. Code Ann. § 4-37-30(A)(1) — permitted transportation projects and the ordinance's required contents
• S.C. Code Ann. § 4-37-30(A)(8) and (15) — Department administration, the separate fund, and quarterly distribution restricted to the ordinance's stated purpose
• S.C. Code Ann. § 8-13-700 — conflicts of interest (conflict-of-interest payments are ineligible costs)

Case discussed in prose (not linked): Richland County and the Central Midlands Regional Transit Authority v. S.C. Department of Revenue, 422 S.C. 292, 811 S.E.2d 758 (2018) — proceeds must fund capital costs of transportation projects and be "tethered" to a specific project; the Department may audit county spending.

Related Department opinion (described in prose, not linked): SC Information Letter #18-10, which RR #22-2 supersedes.

Source

• Landing page: SC Advisory Opinion Search
• Original PDF: RR22-2.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC REVENUE RULING #22-2
SUBJECT:

Local Transportation Tax – Expenditure Guidelines
(Sales and Use Taxes)

DATE:

April 18, 2022

SUPERSEDES:

SC Information Letter #18-10 and all previous advisory opinions and any
oral directives in conflict herewith.

REFERENCES:

S.C. Code Ann. Chapter 37, Title 4 (2020)
Richland County and the Central Midlands Regional Transit Authority v.
S.C. Department of Revenue, 422 S.C. 292, 811 S.E.2d 758 (2018)

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
S.C. Revenue Procedure #09-3

SCOPE:

The purpose of a Revenue Ruling is to provide guidance to the public. It is
an advisory opinion issued to apply principles of tax law to a set of facts
or general category of taxpayers. It is the Department’s position until
superseded or modified by a change in statute, regulation, court decision,
or another Department advisory opinion.

PURPOSE
Title 4, Chapter 37, allows for the imposition of a local sales and use transportation tax
(transportation tax). The purpose of this Revenue Ruling is to provide guidelines to counties who
are considering imposing, or are currently imposing, a transportation tax. The Department will
use these guidelines to assist in determining whether certain costs are considered a proper
expenditure of local transportation tax revenue under the law. 1
OVERVIEW
The Optional Methods for Financing Transportation Facilities Act (Transportation Act), Title 4,
Chapter 37, authorizes the governing body of a county to impose a sales and use tax in an amount
not to exceed one percent (transportation tax) within its jurisdiction for a single project or for
1

Title 4, Chapter 37, is attached for reference purposes.
1

multiple projects for a specific period of time to collect a limited amount of money. Code Section
4-37-30(A). The Transportation Act provides that the types of projects permitted to be funded with
transportation tax revenues are highways, roads, streets, bridges, mass transit systems, greenbelts,
and other transportation-related projects facilities. The ordinance imposing the tax must specify the
projects to be funded from the transportation tax, the estimated capital costs of the projects, and
other information as specified in the statute. Code Section 4-37-30(A)(1).
The transportation tax is administered and collected by the Department in the same manner that
other sales and use taxes are collected. Code Section 4-37-30(A)(8). The tax collected in each
county must be remitted to the State Treasurer and credited to a fund separate from the general
fund of the State. The State Treasurer distributes the revenues and all interest earned on the
revenues while on deposit quarterly to the county in which the tax is imposed, and these
revenues and interest earnings must be used only for the purpose stated in the imposition
ordinance. Code Section 4-37-30(A)(15).
The South Carolina Supreme Court, in Richland County and the Central Midlands Regional
Transit Authority v. S.C. Department of Revenue, 811 S.E.2d 758, 761 (2018), found that the
“revenues generated from such a tax [transportation tax] must be used in accordance with
statutory restrictions imposed by the General Assembly – namely, proceeds must be used for the
capital costs of the types of transportation projects identified in the Transportation Act.” The
Supreme Court also determined that a proper expenditure of transportation tax funds “must be
tethered to a specific transportation-related capital project or the administration of a specific
transportation project.” Id. at 768.
The South Carolina Supreme Court further held that the Department has “extensive
administrative, oversight, and enforcement responsibilities in the Transportation Act and
throughout Title 12 of the South Carolina Code,” which confers upon the Department a duty to
ensure that the County’s expenditures of transportation tax revenues comply with the revenue
laws the Department is charged with enforcing. Id. at 765. The Department is authorized, as a
result of its extensive administrative, oversight, and enforcement responsibilities with respect to
the transportation tax, to conduct audits to ensure a county’s expenditures of transportation tax
revenues comply with the law. Id. at 768.
Therefore, for purposes of the administration and enforcement of the transportation tax, the
Department will use the following guidelines to assist in determining eligible costs (direct costs,
indirect costs, and mass transit systems costs) and ineligible costs when providing advice to
counties, political subdivisions, and other entities that receive and expend transportation tax
funds, and when conducting county transportation tax compliance audits.
The Department has established a Compliance Audit Section responsible for audits of local sales
and use taxes administered by the Department. For questions about the guidelines in this
Revenue Ruling or eligible transportation tax expenditures, contact the Department’s
Compliance Audit Section at [email protected].

2

GUIDELINES FOR USE OF TRANSPORTATION TAX REVENUES
I. General Guidelines
The revenues generated from the transportation tax must be used in accordance with statutory
restrictions imposed by the General Assembly - namely, proceeds must be used for “capital
costs” of the types of transportation projects identified in the Transportation Act or the
administration of a specific transportation project.
“Capital costs” means expenditures that are treated as “capital” expenditures under generally
accepted accounting principles. In general, costs are treated as capital costs if they are incurred
for the planning, acquisition, construction, or improvement of property having a useful life of
more than one year and include costs related to the planning, acquisition, construction, or
improvement of land, buildings, vehicles, equipment, infrastructure improvements, and
intangible assets (e.g., software and intellectual property with a useful life of more than one
year). Capital costs also include costs and expenditures that increase the value of existing
property with a useful life of more than one year or that extend the useful life of existing
property for a period of more than one year. Capital costs consist of both direct costs and indirect
costs (as each term is described below).
II. Eligible Costs
For purposes of these guidelines, “eligible costs” are capital costs, whether direct costs or
indirect costs, as well as certain operational costs relating to mass transit systems as further
described in Section II.C. of these guidelines. “Eligible costs” generally have the following
characteristics:

1. Costs that are reasonable in nature and amount, in that they do not exceed that amount which
   would be incurred by a governmental entity under the circumstances then and there prevailing
   in the conduct of government business.
2. Costs that are generally recognized as ordinary and necessary for the project.
3. Costs that are in compliance with generally accepted business practices.
4. Costs that are in compliance with federal and state laws and regulations, if applicable.
5. Costs that are consistent with market prices for comparable goods or services or that are the
   result of arm’s length bargaining.
6. Costs that are consistent with the county’s fiduciary responsibilities to the public.
7. Costs that do not constitute a significant deviation from a county’s established practices.

3

A. Direct Costs
“Direct costs” are expenditures for material, labor, and financing for transportation-related
projects that would be properly chargeable to a capital asset account as distinguished from
current expenditures and ordinary maintenance expenses.
“Project(s)” means those transportation-related projects described in the imposition ordinance
and ratified in the referendum question in accordance with the provisions of the Transportation
Act, specifically: highways, roads, streets and adjacent sidewalks, bridges, mass transit systems,
greenbelts, and other transportation-related projects facilities including, but not limited to,
drainage facilities relating to the highways, roads, streets and adjacent sidewalks, bridges, and
other transportation-related projects. See Code Section 4-37-30(A)(1)(a)(i).
Examples. The following, to the extent directly related to the planning, acquiring, constructing,
or improving a project or any portion thereof, are examples of eligible direct costs:

1. The purchase price of the property (e.g., land and interests in land, existing buildings and
   structures).
2. The amounts paid a construction company for the construction of a project (e.g., highways,
   roads, streets and adjacent sidewalks, bridges, bus terminals, train terminals, greenbelts, and
   other transportation-related facilities).
3. Direct labor costs.
4. Construction material costs (e.g., asphalt, concrete, steel, electrical wiring, and piping
   including related shipping, freight, and insurance charges).
5. Equipment costs directly used in the construction or improvement of a project, including
   lease payments and depreciation.
6. Site preparation costs (e.g., demolition, environmental remediation, and utility relocation).
7. Engineering, architectural, and design costs.
8. Cost of permits, licenses, performance bonds, surety bonds, easements, and rights-of-way.
9. Legal, accounting, and other professional service fees incurred in connection with the
   planning, acquisition, construction, and improvement of a specific project (e.g., right-of-way
   acquisition and condemnation).
10. Inspection costs.
11. Interest accrued on debt incurred to finance a project, up to the time it (or the portion thereof
    that is financed) is placed in service. A project (or portion thereof) shall be treated as “placed
    in service” at the time at which, based on all the facts and circumstances, (i) the project (or

4

portion thereof) has reached a degree of completion which would permit its operation at
substantially its design level and (ii) the project (or portion thereof) is in fact in operation at
such level.

12. Debt service on bonds or other obligations issued to finance a project or projects, including
    the costs of issuance of such bonds or obligations.
13. Fees paid for public engagement and public information pertaining directly to a project or
    projects.
14. The cost of mitigation credits required by appropriate federal authorities to offset ecological
    losses created by a project.
    B. Indirect Costs
    “Indirect costs” are costs that benefit (i) the construction and improvement of authorized projects
    or (ii) the construction and improvement of authorized projects and other county operations.
    Only the portion of the indirect costs related to projects is eligible indirect costs.
    “Eligible indirect costs” are costs that directly benefit or are incurred by reason of the planning,
    acquisition, construction, or improvement of a project. Such indirect costs should be
    proportionally allocated among the projects based upon an appropriate allocation method
    consistent with applicable accounting standards.
    Eligible indirect costs do not include costs that are otherwise listed as ineligible costs (as defined
    and described below).
    Examples. The following are examples of eligible indirect costs:
15. Portion of an employee’s salary and benefits whose time is allocable to administering the
    planning, acquisition, construction, and improvement of projects.
16. Licensure and continuing education expenses for full-time county transportation department
    employees whose job descriptions require that they hold a professional license.
17. Ordinary and necessary costs of office equipment and supplies, telephone, transportation,
    fuel, and similar costs for employees devoted to administering the planning, acquisition,
    construction, and improvement of projects. This is meant to include the ordinary and
    necessary operating expenses of a county transportation department devoted exclusively to
    the operation of a transportation tax program.
18. Where a county department provides services to a county transportation tax program for
    eligible projects (including the provision of public information to affected citizens or
    communities impacted by one or more projects) and other county departments (i.e., a mixed
    service department), a portion of the county department’s costs may be allocated as eligible
    indirect costs based on either labor cost or labor hours.

5

C. Mass Transit Systems Costs
“Mass transit systems” as used in the guidelines refers only to a mass transit system as provided
for in Code Section 4-37-30(A)(1)(a)(i).
Eligible costs include costs incurred for the acquisition, design, construction, equipping, and
operation of mass transit systems, provided that such costs are consistent with the public
purpose of the Transportation Act, the county’s imposition ordinance, and the referendum
approved by voters.
Eligible costs for mass transit systems must be tethered to the administration of the mass transit
system and must be reasonable and not excessive for the mass transit system. Eligible costs
include purchases of capital assets. Eligible costs also include costs and expenses paid or
incurred in connection with the day-to-day operation of the mass transit system.
Additionally, the mass transit system must comply with certain federal and state requirements
in the operation of the mass transit system. The expenditures necessary to fulfill these federal
and state requirements are also eligible costs, provided the expenditures are reasonable and not
excessive.
III. Ineligible Costs
“Ineligible costs” are all costs that are not tethered to a project or the direct administration of a
project. Furthermore, costs that are excessive or unreasonable or that do not directly benefit or
are not incurred by reason of the planning, acquisition, construction, or improvement of a
project are ineligible costs.
Examples. The following are examples of ineligible costs:

1. Amounts paid in transactions involving conflicts of interest as defined in Code Section 8-13700 and subsequent amendments.
2. Countywide programs intended to support all facets of county operations.
3. County costs for the routine maintenance or upkeep of roads, streets, thoroughfares, bridges,
   and highways.
4. Expenditure for establishment or support of programs to benefit particular constituents or
   persons such as costs associated with a mentor/mentee program, apprenticeship program, or
   other similar type of program.
5. Legal fees and other professional costs incurred in prosecuting or defending a lawsuit or
   claim related to an alleged improper expenditure of transportation tax revenues.

6

6. County overhead costs (e.g., utilities, office supplies, telephone, office facilities, salaries),
except those incurred by the county transportation department in managing and
administering the projects.

7. Costs associated with a county’s normal cost of doing business (e.g., finance and accounting,
   procurement, executive management, human resources, budget and grants management, etc.)
   except where such services are performed exclusively for the benefit of the county
   transportation department.
8. County support costs (e.g., support for the small local business enterprise program of the
   office of small businesses opportunities, procurement, human resources, budget and grants
   management, and finance-related functions) except where such services are performed
   exclusively for the benefit of the county transportation department.
9. Professional fees (e.g., legal, accounting, and engineering) not directly related to a project or
   not exclusively performed for the benefit of the county transportation department.
10. Costs that are duplicative.
    SOUTH CAROLINA DEPARTMENT OF REVENUE

s/W. Hartley Powell
W. Hartley Powell, Director
April 18
, 2022
Columbia, South Carolina

7

Title 4, Chapter 37, “Optional Methods for Financing Transportation Facilities”
SECTION 4-37-10. Transportation authority; establishment; membership.
(A) Subject to requirements of this chapter and the referendum described in Section 4-37-30, the
governing body of a county may by ordinance establish a transportation authority with all of the rights and
powers described in Section 4-37-20. If, pursuant to this section, a county chooses to finance all of the cost
of highways, roads, streets, bridges, and other transportation-related projects and elects to create an
authority for that purpose, the members of the authority board must be appointed by the county governing
body in the manner it determines.
(B) If a county chooses to enter into a partnership, consortium, or other contractual arrangement with one
or more other governmental entities and if the parties choose to form an authority for such purpose, those
other governmental entities must have one or more designated appointees on the authority board as provided
in an intergovernmental agreement to be entered into by the parties. In order for a county to enter into the
formation of an authority, partnership, consortium, or other intergovernmental agreement pursuant to the
provisions of this chapter with other counties, a referendum on the action must be held by each county and
the referendum must be approved by each and every separate county and together.
(C) For purposes of this chapter "governmental entity" is a county in South Carolina, or the State of South
Carolina and its departments and agencies.
(D) The existence of any authority created pursuant to this chapter must terminate not later than twelve
months after a sales and use tax or toll authorized by this chapter terminates.
SECTION 4-37-20. Rights and powers of transportation authority.
The board of the authority has all the rights and powers of a public body, politic and corporate of this
State, including, without limitation, all the rights and powers necessary or convenient to manage the
business and affairs of the authority and to take action as it may consider advisable, necessary, or convenient
in carrying out its powers including, but not limited to, the following rights and powers:
(1) to have perpetual succession;
(2) to sue and be sued;
(3) to adopt, use, and alter a seal;
(4) to make and amend bylaws for regulation of its affairs consistent with the provisions of this chapter;
(5) to acquire by gift, deed or easement, purchase, hold, use, improve, lease, mortgage, pledge, sell,
transfer, and dispose of any property, real, personal, or mixed, or any interest in any property, or revenues
of the authority as security for notes, bonds, evidences of indebtedness, or other obligations of the authority;
(6) to borrow money, make and issue notes, bonds, and other evidences of indebtedness; to secure the
payment of the obligations or any part by mortgage, lien, pledge, or deed of trust, on any of its property,
contracts, franchises, or revenues;
(7) to make contracts, including service contracts with a person, corporation, or partnership including,
without limitation, the South Carolina Department of Transportation, to provide the facilities and services
provided herein; and
(8) execute all instruments necessary or convenient for the carrying out of business.
The board of the authority is not authorized to exercise the powers of eminent domain; however, it may
recommend to the county governing body that property be acquired through eminent domain. The county
governing body must determine if the property is to be acquired through eminent domain and, if so, to
commence the eminent domain proceedings.

8

SECTION 4-37-25. Transportation authority; procurement methods and requirements.
An authority created pursuant to this chapter must comply with Section 11-35-5320. When procuring the
construction, maintenance, and repair of bridges, highways, and roads, an authority must use the same
procurement methods and apply the same procurement requirements used by and applied to the South
Carolina Department of Transportation in the construction, maintenance, and repair of bridges, highways,
and roads including the provisions of Section 12-27-1320 except that when applying Section 12-27-1320,
the contracting entity may meet the expenditures standards of Section 12-27-1320 by either direct or indirect
contracts. For purposes of this provision, "contracting entity" includes a governmental body and a private
entity with which a governmental body contracts for the construction, maintenance, and repair of bridges,
highways, and roads.
SECTION 4-37-30. Sales and use taxes or tolls as revenue for transportation facilities.
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.
(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-subitem (i), of the county and South
Carolina Department of Transportation; or
(iii) projects, of the type specified in sub-subitem (i), operated by the county or jointly-operated
projects of the county and other governmental entities;
(b) the maximum time, stated in calendar years or calendar quarters, or a combination of them, not
to exceed twenty-five years or the length of payment for each project whichever is shorter in length, for
which the tax may be imposed;
(c) the estimated capital cost of the project or projects to be funded in whole or in part from proceeds
of the tax and the principal amount of bonds to be supported by the tax; and
(d) the anticipated year the tax will end.
(2) Upon receipt of the ordinance, the county election commission shall conduct a referendum on the
question of imposing the optional special sales and use tax in the jurisdiction. A referendum for the initial
imposition of the sales and use tax within a county pursuant to this chapter and all subsequent referendums
to impose, extend, or renew the tax must be held at the time of the general election. The commission shall
publish the date and purpose of the referendum once a week for four consecutive weeks immediately
preceding the date of the referendum in a newspaper of general circulation in the jurisdiction. A public
hearing must be conducted at least fourteen days before the referendum after publication of a notice setting
forth the date, time, and location of the public hearing. The notice must be published in a newspaper of
general circulation in the county at least fourteen days before the date fixed for the public hearing.
(3) A separate question must be included on the referendum ballot for each purpose which purpose may,
as determined by the governing body of a county, be set forth as a single question relating to several of the
projects, and the question must read substantially as follows:

9

"I approve a special sales and use tax in the amount of (fractional amount of one percent) (one percent)
to be imposed in (county) for not more than (time) to fund the following project or projects:
Project (1) for _ $ _
Yes ___
No ___
Project (2), etc."
In addition, the referendum, as determined by the governing body of a county, may contain a question
on the authorization of general obligation bonds under the exemption provided in Section 14(6), Article X
of the Constitution of South Carolina, 1895, so that revenues derived from the imposition of the optional
sales and use tax may be pledged to the repayment of the bonds. The additional question must read
substantially as follows:
"I approve the issuance of not exceeding $_ of general obligation bonds of County,
maturing over a period not to exceed ___ years to fund the __ project or projects.
Yes ___
No "
If the referendum on the question relating to the issuance of general obligation bonds is approved, the
county may issue bonds in an amount sufficient to fund the expenses of the project or projects.
(4)(a) If a county has imposed a tax pursuant to this chapter for less than the maximum twenty-five
year term allowed and the tax remains in effect, the governing body of the county at any time may call for
a referendum to extend the term of the tax for up to seven years, and thereafter call for referendums to
extend the term of the tax for up to seven years, for an aggregate total not to exceed twenty-five years. The
referendum to extend the term of the tax must be held at the general election. A separate question must be
included on the referendum ballot for each purpose which purpose, as determined by the governing body
of a county, may be set forth as a single question relating to several of the projects and the question must
indicate whether the project is an existing project or new project. A new project or projects only may be
listed on the ballot to the extent that the county has, or will, complete existing projects. The question must
read substantially as follows:
"I approve the extension of a special sales and use tax in the amount of (fractional amount of one percent)
(one percent) to be imposed in (county) not to exceed ___ years to fund the completion of the following
existing project or projects and/or to fund the following new project or projects:
Project (1) for __ $ ____ (new or existing)
Yes ___
No ___
Project (2), etc."
(b) All qualified electors desiring to vote in favor of imposing the tax for a particular purpose shall
vote "yes" and all qualified electors opposed to levying the tax for a particular purpose shall vote "no". If a
majority of the votes cast are in favor of imposing the tax for one or more of the specified purposes, then
the tax is imposed as provided in this section; otherwise, the tax is not imposed. The election commission
shall conduct the referendum pursuant to the election laws of this State, mutatis mutandis, and shall certify
the result no later than November thirtieth after the date of the referendum to the appropriate governing
body and to the Department of Revenue. Included in the certification must be the maximum cost of the
project or projects or facilities to be funded in whole or in part from proceeds of the tax, the maximum time
specified for the imposition of the tax, and the principal amount of bonds to be supported by the tax
receiving a favorable vote. Expenses of the referendum must be paid by the jurisdiction conducting the
referendum. If the tax is approved in the referendum, the tax is imposed effective the first day of May
following the date of the referendum. If the reimposition of the tax pursuant to this article is approved in
the referendum, the new or existing tax must be imposed, extended, or renewed immediately following the
termination of the earlier imposed tax. If the certification is not made timely to the Department of Revenue,
the imposition is postponed for twelve months.
(5) The tax terminates on the earlier of:
(a) the final day of the maximum time specified for the imposition; or
10

(b) the end of the calendar month during which the Department of Revenue determines that the tax
has raised revenues sufficient to provide the greater of either the cost of the project or projects as approved
in the referendum or the cost to amortize all debts related to the approved projects.
(6) When the optional sales and use tax is imposed, the governing body of the jurisdiction authorizing
the referendum for the tax shall include by definition more than one item as defined in (a)(i) and (a)(ii) to
describe the single project or multiple projects for which the proceeds of the tax are to be used.
(7) Amounts collected in excess of the required proceeds first must be applied, if necessary, to
complete each project for which the tax was imposed. Any additional revenue collected above the specified
amount must be applied to the reduction of debt principal of the imposing political subdivision on
transportation infrastructure debts only.
(8) The tax levied pursuant to this section must be administered and collected by the Department of
Revenue in the same manner that other sales and use taxes are collected. The department may prescribe the
amounts which may be added to the sales price because of the tax.
(9) The tax authorized by this section is in addition to all other local sales and use taxes and applies to
the gross proceeds of sales in the applicable jurisdiction which are subject to the tax imposed by Chapter
36 of Title 12 and the enforcement provisions of Chapter 54 of Title 12. The gross proceeds of the sale of
items subject to a maximum tax in Chapter 36 of Title 12 are exempt from the tax imposed by this section.
The gross proceeds of the sale of food lawfully purchased with United States Department of Agriculture
food stamps are exempt from the tax imposed by this section. The tax imposed by this section also applies
to tangible personal property subject to the use tax in Article 13, Chapter 36 of Title 12.
(10) Taxpayers required to remit taxes pursuant to Article 13, Chapter 36 of Title 12 must identify the
county in which the tangible personal property purchase at retail is stored, used, or consumed in this State.
(11) Utilities are required to report sales in the county in which consumption of the tangible personal
property occurs.
(12) A taxpayer subject to the tax imposed by Section 12-36-920, who owns or manages rental units
in more than one county shall report separately in his sales tax return the total gross proceeds from business
done in each county.
(13) The gross proceeds of sales of tangible personal property delivered after the imposition date of
the tax levied pursuant to this section in a county, either pursuant to the terms of a construction contract
executed before the imposition date, or a written bid submitted before the imposition date, culminating in
a construction contract entered into before or after the imposition date, are exempt from the special local
sales and use tax provided in this section if a verified copy of the contract is filed with the Department of
Revenue within six months after the imposition of the special local sales and use tax.
(14) Notwithstanding the imposition date of the special local sales and use tax authorized pursuant to
this section, with respect to services that are billed regularly on a monthly basis, the special local sales and
use tax is imposed beginning on the first day of the billing period beginning on or after the imposition date.
(15) The revenues of the tax collected in each county pursuant to this section must be remitted to the
State Treasurer and credited to a fund separate and distinct from the general fund of the State. After
deducting the amount of refunds made and costs to the Department of Revenue of administering the tax,
not to exceed one percent of the revenues, the State Treasurer shall distribute the revenues and all interest
earned on the revenues while on deposit with him quarterly to the county in which the tax is imposed, and
these revenues and interest earnings must be used only for the purpose stated in the imposition ordinance.
The State Treasurer may correct misallocations by adjusting later distributions, but these adjustments must
be made in the same fiscal year as the misallocations. However, allocations made as a result of city or
county code errors must be corrected prospectively.
(16) The Department of Revenue shall furnish data to the State Treasurer and to the counties receiving
revenues for the purpose of calculating distributions and estimating revenues. The information which must
be supplied to counties upon request includes, but is not limited to, gross receipts, net taxable sales, and tax
liability by taxpayers. Information about a specific taxpayer is considered confidential and is governed by
the provisions of Section 12-54-240. A person violating this section is subject to the penalties provided in
Section 12-54-240.
11

(17) The Department of Revenue may promulgate regulations necessary to implement this section.
(B)(1)(a) This item (B) is intended to provide an additional and alternative method, subject to a
referendum, for the provision of and financing for highways, roads, streets, and bridges, and other
transportation-related projects, either alone or in partnership with other governmental entities to the end
that these transportation-related projects may be undertaken in such manner as may best be calculated to
expedite relief of hazardous and congested traffic conditions on the highways in the State, including the
authorization for turnpike projects undertaken by the Department of Transportation in Article 9 of Chapter
5 of Title 57. The Department of Transportation is prohibited from removing funds previously dedicated to
the project or designated county area under its allocation formula based upon the fact that a county has
passed a referendum to impose the tax provided in this chapter.
(b) Subject to the requirements of this item (B), the governing body of a county may by ordinance
authorize, subject to a referendum, an authority to use tolls to finance projects authorized by this section.
(c) The ordinance enacted by the governing body of the county to authorize an authority to use tolls
must specify:
(i) the purpose for which the toll revenues are to be used which may include jointly-operated
projects between the authority and the South Carolina Department of Transportation;
(ii) the maximum time, stated in calendar years or calendar quarters, or a combination of them,
not to exceed twenty-five years, for which the tolls may be imposed; and
(iii) the maximum cost of the project or facilities to be funded in whole or in part from toll
revenues and the principal amount of bonds to be supported by the tolls.
(d) Upon receipt of the ordinance, the county election commission shall conduct a referendum on
the question of authorizing an authority to use tolls in the jurisdiction. The referendum must be held on the
first Tuesday occurring sixty days after the election commission receives the ordinance. If that Tuesday is
a legal holiday then the referendum must be held on the next succeeding Tuesday that is not a holiday. The
commission shall publish the date and purpose of the referendum once a week for four consecutive weeks
immediately preceding the date of the referendum, in a newspaper of general circulation in the jurisdiction.
A public hearing must be conducted at least fourteen days before the referendum, after publication of a
notice setting forth the date, time, and location of the public hearing. The notice must be published in a
newspaper of general circulation in the county at least fourteen days before the date fixed for the public
hearing.
(e) A separate question must be included on the referendum ballot for each purpose and the question
must read substantially as follows:
"I approve the imposition of tolls on the following project or projects in (county) for not more
than (time) to fund the following project or projects:
Project (1) for _ $ _
Yes ___
No ___
Project (2) etc."
(f) All qualified electors desiring to vote in favor of imposing tolls for a particular purpose shall
vote "yes" and all qualified electors opposed to imposing tolls for a particular purpose shall vote "no". If a
majority of the votes cast are in favor of imposing tolls for one or more of the specified purposes, then tolls
are imposed as provided in this section; otherwise, an authority is not authorized to impose tolls. A
subsequent referendum on this question, after the question is disapproved, must not be held more than once
in twenty-four months. The election commission shall conduct the referendum under the election laws of
this State, mutatis mutandis, and shall certify the result no later than sixty days after the date of the
referendum to the appropriate county governing body and authority and to the South Carolina Department
of Transportation. Included in the certification must be the maximum cost of the project or facilities to be
funded in whole or in part from proceeds of the tolls and the maximum time specified for the imposition of
the tolls receiving a favorable vote. Expenses of the referendum must be paid by the jurisdiction conducting
the referendum.
(g) Tolls terminate on the earlier of:
12

(i) the final day of the maximum time specified for the imposition; or
(ii) the end of the calendar month during which the authority determines that the tolls have raised
revenues sufficient to provide the greater of either the cost of the project or projects as approved in the
referendum or the cost to amortize all debts related to the approved projects.
(h) When tolls are imposed for more than one purpose, the governing body of the jurisdiction
authorizing the referendum for the tolls shall determine the priority for the expenditure of the net proceeds
of the tolls for the purposes stated in the referendum.
(i) Amounts collected in excess of the required proceeds must first be applied, if necessary, to
complete each project for which the toll was imposed; otherwise, the excess amounts must be credited to
the general fund of the jurisdiction imposing the tax for infrastructure use only.
(2) If the voters have approved the imposition of tolls by referendum and if the authority enters into a
partnership, consortium, or other contractual arrangement with the Department of Transportation relating
to turnpike facilities, the authority may designate, establish, plan, improve, construct, maintain, operate,
and regulate designated highways, roads, streets, and bridges as "turnpike facilities" as a part of the state
highway system or any federal aid system whenever the authority determines the traffic conditions, present
or future, justify these facilities. Under such partnership arrangement, the authority may utilize funds
available for the maintenance of the state highway system for the maintenance of any turnpike facility
financed pursuant to this chapter. If the authority determines it is feasible to make all or part of a
construction project a turnpike facility, it may engage in the preliminary estimates and studies incident to
the determination of the feasibility or practicability of constructing any toll road as it from time to time
considers necessary and the cost of the preliminary estimates and studies may be paid from the general
highway fund and must be reimbursed from funds provided under this chapter only if the studies and
estimates lead to the construction of a toll road.
(3) Under the partnership arrangement, the authority may acquire such lands and property, including
rights of access as may be needed for turnpike facilities, by gift, devise, purchase, or condemnation by
easement or in fee simple as authorized by law on or after the effective date of this chapter for acquiring
property or property rights in connection with other state highways.
(4) In designating, establishing, planning, abandoning, improving, constructing, maintaining, and
regulating turnpike facilities, the authority may exercise such authorizations as are granted generally to the
Department of Transportation by the statutory law applicable to the state highway system, except as they
may be inconsistent with the provisions included in this chapter.
(5) Whenever it becomes necessary that monies be raised for the transportation facilities described in
this chapter, the authority may issue toll revenue bonds in a principal amount not to exceed the amount
authorized in the referendum to authorize the authority to impose tolls to provide all or a portion of the cost
of these facilities and maintenance of the toll road after adopting its resolution setting forth the following:
(a) the toll facility proposed to be constructed;
(b) the amount required for feasibility studies, planning, design, right-of-way acquisition, and
construction of the toll facility;
(c) a tentative time schedule setting forth the period of time for which the toll shall be imposed and
set forth a schedule for elimination of all or part of all tolls;
(d) a debt service table showing the estimated annual principal and interest requirements for the
proposed toll revenue bonds;
(e) any feasibility study obtained by the authority relating to the proposed toll facility;
(f) any covenants to be made in the bond resolution respecting competition between the proposed
toll facility and possible future highways whose construction would have an adverse effect upon the toll
revenues which would otherwise be derived by the proposed toll facility;
(g) any additional revenue collected above the specified amount to satisfy the principal and interest
of toll revenue bonds or maintenance must be applied to the reduction of debt principal of the imposing
political subdivision.
(6) In addition to the powers listed above, the authority may in connection with such toll facilities:

13

(a) fix and revise from time to time and charge and collect tolls for transit over each turnpike facility
constructed by it;
(b) combine for the purpose of financing the facilities any two or more turnpike facilities;
(c) control access to turnpike facilities;
(d) to the extent permitted by a bond resolution, expend turnpike facility revenues in advertising the
facilities and services of the turnpike facility or facilities to the traveling public;
(e) receive and accept from any federal agency grants for or in the aid of the construction of any
turnpike facility;
(f) do all acts and things necessary or convenient to carry out the powers expressly granted in this
chapter;
(g) enter into contracts with the Department of Transportation for sharing the cost of building and
the revenues derived from the facilities authorized in this chapter and for the operation and maintenance of
the facilities for transportation infrastructure debts only.
(C) It is intended that this chapter is an additional and alternative method of financing highway and bridge
projects to those already provided under the provisions of the State Highway Bond Act (Section 57-11-210),
the State Turnpike Bond Act (Section 57-5-1310 et seq.), the Revenue Bond Act for Utilities (Section
6-21-10 et seq.), and Section 4-9-30(5).
(D) The Department of Transportation must not diminish or decrease funds available to a municipality,
county, or multi-county area because a project has been funded in the municipality, county, or multi-county
area pursuant to a referendum provided in this chapter.
SECTION 4-37-40. Limitation on sales tax rate.
At no time may any portion of the county area be subject to more than one percent sales tax levied
pursuant to this chapter, Article 3, Chapter 10 of this title, or pursuant to any local legislation enacted by
the General Assembly.
SECTION 4-37-50. Unidentified funds; transfer and supplemental distributions.
Annually, and only in the month of June, funds collected by the department from the local option
transportation facility tax, which are not identified as to the governmental unit due the tax, must be
transferred, after reasonable effort by the department to determine the appropriate governmental unit, to the
State Treasurer's Office. The State Treasurer shall distribute these funds to the county treasurer in the county
area in which the tax is imposed and the revenues must be used only for the purposes stated in the imposition
ordinance. The State Treasurer shall calculate this supplemental distribution on a proportional basis, based
on the current fiscal year's county area revenue collections.

14