By Betsy Finklea
The Treasurer’s complaint was heard by Judge Michael Nettles last Thursday and Friday.
The plaintiff is Jamie Calhoun Estes, Dillon County Treasurer, who filed a complaint in July against Rodney Berry as administrator of Dillon County and in his capacity as Chief Officer of the Dillon County Government, the Dillon County Board of Education, and Northeastern Technical College. In her complaint, Estes asked for a declaratory judgment on the following:
1. As to what portion of the Local Option Sales Tax, if any, Plaintiff should distribute to the Dillon County Board of Education.
2. As to what portion of the two-mill tax added on to the Dillon County General Tax, if any, should be paid to Northeastern Technical College.
3. As to the validity of the 2017-2018 Dillon County Budget Ordinance passed by Dillon County Council on June 30, 2017.
4. That pursuant to the Declaratory Judgment Statutes, the Court may award fees and expenses in its discretion and Plaintiff believes she is entitled to recover fees and expenses from Dillon County.
5. That in an action against a governmental entity such as a County, a party is entitled to recover fees and costs and Plaintiff believes she is entitled to recover fees and costs from Dillon County.
Since the time of her filing various counterclaims have been filed by some of the parties involved and two motions have been heard by the judge. (For more on this, visit www.thedillonherald.com.)
Attorneys representing County Treasurer Jamie Estes were Charles Curry and Janet Byrd.
Attorneys representing County Administrator Rodney Berry were Rob Tyson and Will Jordan.
Attorneys representing the Dillon County Board of Education were Paul Porter and Bruce Davis.
Representing Northeastern Technical College was Charles Boykin.
The case was heard by Judge Michael Nettles.
Prior to the start of the case, Charles Boykin told the judge that NETC and the county had reached an agreement. Note: Once that agreement is signed, we will release that in the newspaper. Rob Tyson, who was representing Berry, said that the county appreciated their partnership with the college. Judge Nettles said that he was pleased they had reached a resolution and that it was good for all concerned.
The first witness called by Curry was County Treasurer Jamie Estes. Estes took office as Dillon County Treasurer in 2007. She said the Local Option Sales Tax (LOST) money had been collected since July 1996. Seventy-one percent goes to property tax relief. She said since its inception one half of the county’s portion goes to the Dillon County Board of Education and the other half goes to the county’s general fund. This is the way it has been handled for approximately 20 years. She received a letter on June 30 from County Administrator Rodney Berry telling her to no longer disburse the funds to the Dillon County Board of Education. She received a request from the Dillon County Board of Education for the money. She does not know what to do.
She said in her testimony that she believed the budget was procedurally incorrect and that she was to pay out based on a valid budget. She said on the second reading that there was no ordinance and that the paperwork was lacking information. Between the second and third readings, she said the number had changed. She said there was an increase in the salary line for the Roads and Bridges Department and that the school system had a line item for $150,000. She said when they had the third reading, there were no amendments to address these changes with the exception of the removal of the $150,000 for the school system. She said at the public hearing that the public was limited on what they could present.
She read from financial documents showing the difference in the Roads and Bridges department. The total budget went up from $875,814 on June 8th to $954,680 on June 28th. A document printed on the morning of September 14 still shows the amount of $954,680 that was present at the third reading, but not the second reading. On the June 28th minutes, there were no amendments noted in these minutes. She said that on page 5 of the June 28th minutes, Councilman Stevie Grice stated that he did not know what was in the budget and needed more time to review it. She noted in the June 30th minutes that the only amendment made was the one by Councilman James Campbell regarding the $150,000 for the school system.
Estes spoke about The Dillon Herald’s video of the meeting and said upon reviewing the public hearing, she did not believe that the public was given the opportunity to speak. She said three readings and a public hearing is a statutory requirement.
In the cross-examination of Estes, Tyson asked if the county had implemented a supplemental budget. Estes said yes and that she had no problem with that process. She said it was done after she had filed the complaint and after the judge had ordered her to follow the first budget. She said she believed that they would need a valid budget to do a supplemental budget. She questioned whether it was a valid supplemental budget.
In re-direct, she noted that she was complying with the 2017-2018 budget.
Betsy Finklea, editor of The Dillon Herald, testified about the video of the June 28th meeting and verified that various articles and ads had appeared in The Dillon Herald.
Richard Gaddy, Dillon County Finance Director, testified that the county is working off of the supplemental budget that was passed.
A motion was made for a directed verdict by the county administrator’s attorney, but it was denied.
County School Board’s Case
The first witness for the Board of Education was Superintendent Ray Rogers from Dillon District Four. He recalled an informal meeting at South of the Border with County School Board members Richard Schafer, Mendel Smith, and Earl Gleason, Sr., County Council Chairman Horace Arnette, and County Administrator Hartsell Rogers about the sales tax. He said they said that they had to have a jail and the courthouse renovated. The school needed funds for the renovation of the buildings. He said they would get half of what the county would get if they would help get the tax passed. Rogers said they went out and went to work encouraging the public to vote for the tax. He said that the money is now being used to pay the $60 million loan on the capital improvements that were done such as the construction of Dillon Middle School.
During cross-examination, Rogers noted that there was no written document that he knew of that showed a deal between the county and the school. Rogers said if they don’t get the $319,000 from the LOST tax that they would have to take it from the kids in some other way.
Steve Laird, who was the Lake View Superintendent at the time the tax was being discussed, said it was his understanding that half would go to the county and half would go to the Board of Education, and it was to be spent on capital needs. He said they were able to do a number of things in Lake View when they started receiving this money. Upon cross-examination, he also said he knew of no written agreement.
Jackie Hayes, athletic director/head football coach and member of the General Assembly, said that County Council Chairman Horace Arnette and County Councilman Chester Taylor approached him about the tax. He said they needed the money, but didn’t want to increase taxes. The 1990 referendum had failed, and they needed the school’s help to get the 1995 referendum passed. He said they said it would be a 50-50 split, the schools would get half and the county would get half. He said the LOST tax had enabled the schools to upgrade the facilities and to get on the same playing level.
During the cross-examination, Tyson questioned Hayes about a question he had sent to DOR about whether it was legal or not legal for the schools to receive the money because he had been told by someone that it might not be legal. He said when the people went to the polls in 1995, they were told that the county would get half and the board would get half.
Lisa Gray, the former Clerk to Council who was serving in 1995, identified some handwritten notes as the meeting notes that she took. These handwritten notes state that Councilman Chester Taylor made the motion to divide the money with the schools seconded by Councilman James “Pee Wee” Webster. She said that these notes would have been turned into formal meeting minutes. (Note: These minutes are missing.) She said she never remembered a time in her career when she took notes at a meeting and formal meeting minutes were not made.
During cross-examination by Tyson, she reviewed the process and some of the language in her written notes.
Richard Schafer, County School Board Chairman, was next to testify. He talked about as others had in previous testimony about the meeting at South of the Border where the county and the County Board of Education agreed to split the money. He said they needed the school’s support. At the time, the school had 650 employees and 6,500 students. He spoke about an article that appeared in The Dillon Herald that was consistent with the handwritten notes of Lisa Gray. Schafer discussed the council meeting for which he was present. He also discussed an advertisement that appeared in the newspaper. He said they have gotten the money for 20 years, and then he read in the newspaper that the council was considering keeping the money this year. He said he thought the council were trying to take it because the council didn’t think they had a legally-binding agreement and felt that it was nothing more than a handshake. He said the council had a shortfall.
Schafer spoke about the public hearing on June 28th. He said he first asked to be on the agenda and was denied so he signed up for the public hearing. He said he was cut off because what he was speaking about was not germaine to the budget.
He said they asked for meetings with the superintendents and himself to discuss the options. He said the county school board refused the $150,000 gift so on third reading it was taken out.
He said there was another meeting request and the same offer was made. He said some of the projects done were updating Gordon and Dillon High School, fixing roofs, etc. Schafer said the money is being used now to repay the debt incurred with the $60 million capital projects.
During cross-examination, Schafer said that the county board had offered the county a loan. He also said there was not a written agreement of which he was aware. Schafer said if they did not receive the money, they would likely have to raise taxes because they cannot take funds from the operating funds to repay debt.
James “Pee Wee” Webster, a county councilman at the time, said that when council tried to pass the LOST tax in 1990, they were shot down. He said they tried again in 1995, but needed the help of the schools to pass it. He said they voted to split that money with the schools. He said they 100 percent needed the schools to get it passed and to the county, it was worth it to split the money.
W. Clay Young, former county administrator, was the next to testify. He said the money was being split this way when he arrived. He also said better schools are a benefit for the county in economic development matters.
Mary Louise Parham, former county treasurer, also testified. She was treasurer at the time. She testified about how the money was received and split.
Harold Kornblut, the county’s independent auditor at the time, talked about a note that he had in the audit for the fiscal year ending June 30, 1997 that talked about the agreement of a 50-50 split between the school district and the county. He said this was in the minutes for that meeting because he always reviewed the minutes. He said he considered it a correct distribution of funds.
Kay McKenzie, the current county auditor, also testified. She recalled seeing how the money was split on a report she receives.
Doug Broome, the Board of Education Business Manager, said that the LOST money was considered in the repayment of debt to the USDA and was part of the package presented. He said they can’t use operations money to pay debt. He said they would have to ask the auditor to raise the millage if they don’t receive the money. He said that he didn’t know of other options.
After Broome’s testimony, the County Board of Education rested its case, and this concluded court on Thursday.
On Friday, Will Jordan renewed his motions for a directed verdict. There were discussions about whether this was a business endeavor or a governmental endeavor.
Dillon County Administrator’s Case
Finance Director Richard Gaddy was called back to the stand. He testified about the workshop where this was discussed. He said they were operating on the supplemental budget.
Councilman Harold Moody, who was also on the council during this time, also testified. He said they did want funds for a jail in 1995. He said the state was about to force them to take their prisoners to Effingham and charge them $75 a day per prisoner. He said the LOST was a great deal for the taxpayers and would help the county and the schools. He said County Administrator Hartsell Rogers contacted Board Chairman Richard Schafer, and they started meeting on it. He said they agreed to split the money evenly with the schools because it was an excellent deal for all of them and the mood was that all of council was in agreement to split the money with the school.
The wording of the referendum was discussed.
Moody also talked about the June 28th public hearing. He said it was very controversial. He thought it could have been handled in a different way. He stated that he did not vote for the budget. He agreed that it was important to keep their word to the Board of Education.
County Administrator Rodney Berry, who lives in Marion, said that he served as mayor of Marion and had participated in the budget process there. He said with the coming of the port that economic development potential was at historic levels. He said they had to find a means to balance the budget, and this forced them to look at all revenue streams. He said their ultimate goal it to make money to benefit every aspect of Dillon County. He spoke about meetings they had had, and he said he thought they had struck a deal for $150,000, but it was refused. He said that he would still recommend this. He said as a constant advocate for the county and for the county to move forward, he would recommend this and believes that county council has an appetite to do so. He said it is a must that the county and county school board work together. When asked, he agreed that he did not think that had an enforceable or legally-binding agreement.
After Berry’s testimony, Rodney Berry’s attorneys rested their case.
Judge Nettles asked Attorneys Porter and Tyson to prepare orders to submit to him within 10 days. Judge Nettles said he would look at the law, look at the orders, and do research. A decision will be rendered sometime after the orders are submitted.