Richland County releases results of internal audit on H-tax program

A comprehensive internal review of Richland County’s hospitality tax program shows an initiative that has greatly benefitted the community and requires no operational changes, but notes staff must improve its oversight of organizations that receive funding.

Staff submitted the more than 500-page report to County Administrator Gerald Seals for review on Dec. 30. In his subsequent report to County Council, Seals said the program is responsive and adaptive, although misunderstood and requiring a more developed system of internal controls to reduce instances of noncompliance. Staff already is working to make the process more user-friendly for County Council and residents.

“These internal enhancements are needed to prompt increased compliance and will be installed prior to the beginning of the Biennium Budget I,” Seals said in reference to the new two-year budget cycle slated to begin July 1.

The hospitality tax program provides funding on three levels:

• Level 1 addresses funding gaps by County promotional entities
• Level 2 grants funding through the Hospitality Tax Advisory Committee
• Level 3 provides “seed” funding through Council advocacy based initiatives

The report, which focused on the fiscal years 2014-2016, shows that multiple Councilmembers advocate for funding for various organizations that provide diverse events or services to Richland County visitors and residents. Typically, these are entities that require funding to help them become viable.

County Council passed an ordinance in 2003 establishing a 2 percent tax on prepared food and beverages sold in the unincorporated areas of the County. The hospitality tax program has processes, procedures and controls in place. Hospitality tax funds, used to promote tourism in the County, are allocated by County Council to organizations through the following processes:

• A competitive program, in which organizations submit a grant application for review by the County’s Hospitality Tax Advisory Committee made up of residents.
• Council sponsored funding requests, in which Councilmembers sponsor funding requests for organizations to be considered.
• Ordinance organizations, by which certain entities – the Township, EdVenture, Historic Columbia and the Columbia Museum of Art – receive a specific level of funding each year in the County budget.

“The checks and balances of the program are provided by Council as the allocation of funding is not done by one Councilmember,” Seals said. “Instead, a majority vote of approval is needed to set fiscal policy and enable funding initiatives.”

A copy of the internal audit can be viewed online at www.rcgov.us.