Challenge to road user fee seeks $260M in damages
A Georgetown man is seeking $260 million from Georgetown County for himself and others who paid a road user fee adopted by the county in 2001. A class action suit filed last week in Circuit Court seeks 10 times the $26 million in fees collected by the county as damages.
Richard A. Butts is the only named plaintiff in the suit that seeks to challenge the fee based on a ruling by the state Supreme Court in June that invalidated a change in the “road maintenance fee” adopted by Greenville County Council in 2017.
The suit is one of several filed across the state in recent months according to the S.C. Association of Counties.
“This is one of the main issues with what the Supreme Court did. It put blood on the water for all these plaintiffs’ attorneys,” said Josh Rhodes, general counsel and assistant director of the association.
In a unanimous decision, the high court ruled that the Greenville County fee violated a 1997 state law that defines a service or user fee as one that “benefits the payer in some way different from the members of the general public not paying the fee.”
Greenville County argued that the fee was paid by the people who use the roads the most. The court found that wasn’t enough to satisfy the law.
“In fact, every driver on any road in Greenville County – whether their vehicles are registered in Greenville County, Spartanburg County, or some other state – benefits from the fact that the funds are ‘specifically allocated for road maintenance,’” the Supreme Court said.
That made the Greenville County charge a tax rather than a fee, the court said, and state law prevents local governments from adopting taxes other than property taxes without approval of the legislature.
The county was able to keep a $15 fee that it adopted in 1993 because that predated the state law. The ruling invalidated the ordinance raising the fee to $25.
The Supreme Court’s decision only applied to the Greenville County fee, Rhodes said. “I think these suits are totally without merit,” he added.
The suit filed by Butts, an owner of real estate and several vehicles, claims that Georgetown County’s road user fee is invalid for the same reasons cited by the Supreme Court in the Greenville County case. Georgetown County’s fee is $50 per vehicle.
“Since 2007, Georgetown County has collected an estimated $26 million in illegal Road User Fees from Georgetown County residents,” according to the suit, filed by Clayton B. McCullough, an attorney in Mount Pleasant.
Butts filed suit on behalf of himself and an unknown number of people who also paid the fee. “Plaintiff has strong interests in vindicating their rights,” according to the suit.
The suit names County Council, Administrator Angela Christian and Treasurer Miriam Mace as defendants. Since the Greenville County decision, Georgetown County has not acted to repeal its ordinance or refund the fees, the suit notes.
Butts asks the court to declare the county fee “unconstitutional and unlawful” and that the county owes taxpayers a refund. It seeks damages of 10 times the amount collected.
The Greenville County suit, which was originally filed by three members of the County Council and three members of the legislative delegation, only sought an injunction that barred the collection of the fee. The Supreme Court did not address the question of a refund.
“The whole argument that the county knowingly and illegally collected fees, they’re not illegal until a court says they are,” Rhodes said. “That’s well established.”
Rhodes also said that any dispute over taxes needs to be brought in the state Administrative Law Court. That court doesn’t allow class-action suits, which by statute allow plaintiffs to seek 10 times the damages. The attorney’s would get a third of that, Rhodes added. “This is all under the guise of protecting the taxpayers.”
The association has urged counties to adopt a resolution calling on the state legislature to clarify the law on fees. If the service provided by the fee was defined as “different from or greater than” the service provided to non-payers, as Greenville County argued, it would solve the problem, it says.
“The Supreme Court has created this level of uncertainty,” Rhodes said. “That’s more of a reason this needs to be fixed legislatively.”