WALHALLA — When Oconee County Treasurer Greg Nowell called for a state investigation in August about the possibility that Oconee taxpayers might have been overcharged, county officials’ reaction was: “Bring it on.”

County Administrator Dale Surrett parried Nowell’s thrust by also requesting a South Carolina Department of Revenue (DOR) review of the millage rate and tax collections in Oconee.

Surrett and his county staff refute Nowell’s allegations that taxpayers paid an incorrect amount of taxes over the past three years. He said that is shown by the fact that county officials lowered the total millage rate from 216.6 in 2005-06 to 204 in 2006-07.

County officials publicly and privately say that Nowell’s assertions are founded on shaky ground.

For his part, Nowell refuses to blink or step back.

State tax officials refereeing the showdown have indicated a report on the dispute will be issued sometime this week. DOR’s ruling could have far-reaching implications.

Should DOR find there is merit to Nowell’s allegations that taxpayers could have paid as much as $72 million in extra taxes, the impact on Oconee government would be devastating. If Oconee is ordered to refund any substantial amount to taxpayers, it would effectively delay or scrap some of the big-ticket capital projects being talked about, such as an addition to the jail, a wastewater treatment plant at the industrial park in Fair Play or a new Seneca library.

On the other hand, if DOR dismisses Nowell’s assertions, would it have any negative bearing on the treasurer’s election race in November?

Nowell said his prime concern has been making sure that Oconee taxpayers are getting a fair shake. Although some have characterized his actions as an attack on the integrity of county employees and officials, Nowell said that is far from the truth. He even went so far as to say that he would take his case to the state Attorney General if, in his judgment, DOR whitewashes the inquiry.

Nowell asserts that in 2003, 2004 and 2005 Duke Energy paid less taxes than it should have because the county miscalculated the company’s tax bills based on state assessments. This resulted in the county and the school district having less tax revenue for operations.

However, County Auditor Linda Nix said the county and the school district simply tapped into their reserve funds to make up the difference.

The county may or may not have noticed the shortfalls, but the school district obviously did. There are letters on record in the auditor’s office from school officials referencing a shortfall and asking where the money was.

In fact, former Superintendent Valerie Truesdale confirmed that she pressed the county for answers when the school was getting shortchanged.

Duke officials say the company’s bookkeepers self-identified the tax bill shortage in 2005.

As a result, in 2006, Duke made out a check to the county for $34.1 million that included its tax obligations for 2005 and back taxes owed in 2003, 2004 and 2005.

Nix broke down the amount of back taxes paid by Duke: $2,343,791.65 in 2003; $4,213,873.40 in 2004; and $7,962,391.45 in 2005 for a grand total of $14.5 million.

County officials say it is significant that the mistake was one of miscalculating the tax bill forwarded to Duke and not a mistake on the assessments. It shows, they say, that taxpayers never made up any of the Duke shortfall. Instead, officials credit the housing boom that drove up property values for generating additional tax revenues.

Also, the county claims Nowell misstated that Duke paid $24 million in back taxes from 2003-2005 when the company actually paid $14.5 million.

Nowell, though, said the county’s total millage rate in 2004-05 was 205 mills. He said before the county was aware it was due a windfall from Duke in the fall of 2005, it issued tax bills with a 216.6 mill rate for the 2005-06 budget. That generated a tax increase of $10 million, which he claims was unnecessary in light of Duke’s $14.5 million windfall.

The treasurer also charges that the County Council failed to have a public hearing on the 2005-06 tax increase as required by law. A meeting was held Sept. 6, 2005 to approve the millage rate, but a motion by Councilman Frank Ables to approve it died for lack of a second, according to the minutes.

Nowell said the county hastily scheduled another meeting Sept. 9 to pass the millage rate but claims the public was not informed of the meeting because it was done at such short notice.

The County Council approved the tax increase on the second try by a 3-1 vote with Councilman Tommy Crumpton voting against it, the minutes show.

State tax officials carefully reviewed the minutes of those meetings.

“That was something the DOR was very interested in,” Nowell

______________________________________________________________________________________________________________________________

Tracker box:

■ Last we knew: State Department of Revenue officials came to Oconee County in September where they launched an investigation into allegations made by County Treasurer Greg Nowell who claimed that taxpayers might have been overcharged by as much as $72 million from 2004-2007. Nowell said a county miscalculation of Duke Energy’s tax bills in 2003, 2004 and 2005, which was rectified with a lump-sum payment by Duke in 2006, contributed to taxpayers dishing out more.

â–  The latest: The county claims that the Duke payback in 2006 was $14.5 million and not $24 million as Nowell previously stated. County sources say Nowell failed to take into consideration the housing boom from 2005-2006 that explains why tax revenue jumped from $76.9 million in fiscal year ended in 2005 to $95.2 million in fiscal year ended in 2006 and remained almost as high in fiscal year ended in 2007. Nowell countered that when the county issued its 2005-2006 tax bills, officials did know they would be getting a Duke windfall in 2006. As a result, he said, there was a millage increase in fiscal 2005-06 that generated a $10 million tax increase.

■ What’s Next: The state Department of Revenue said it would issue a report on the dispute sometime next week.