‘No way around it.’ How potential economic slowdown would hit York County road plans

York County voters are likely to face a more than $400 million decision this fall on area roads. But an economicslowdown could significantly change how much of that road work gets done.

A citizen commission tasked with creating a new Pennies for Progress road list finalized that list last week. Pennies is a 1% sales tax to fund new or improved roads.

Kevin Madden, assistant county manager over finance, warned the commission about key economic indicators he sees that could point to a coming recession. Specifically, there’s been a dive in deed stamp and permit revenue , he said.

“You go back and look at the last recession, you see those things tail off,” Madden told the commission last week.

Deed stamps are paid when land, homes or other realty are transferred. Permits are required to build most anything, from homes to commercial properties.

The drop in permits could be due in part to recent York County Council decisions on development standards, where past councils may have been more eager to see new development, Madden said. But largely, revenue drops are part of a larger trend.

Inflation has been higher than expected the past few months and interest rates remain high, he said. “We are going to have a slowdown,” Madden said. “No way around it.”

How a slowdown would impact Pennies

In March, Madden estimated the commission could budget a new Pennies referendum this fall on $400 million to $425 million in collections during a seven-year span. Pennies is a 1% sales tax, if approved by voters, used to fund major road work jobs.

His warning last week was to aim toward the $400 million end. That dollar figure still would be more than $100 million higher than any of the previous four Pennies referendum amounts.

The commission came up with an almost $411 million road list. It includes $225 million for projects approved in past Pennies campaigns that aren’t finished. York County Council will get the list next month.

Council can vote to put it on a ballot in November, but can’t vote to alter the list.

All four Pennies campaigns to date have collected more tax revenue than was projected on their ballots. All four, too, have had project costs come in higher than that projected.

Pennies 4 in 2017 was on pace to hit its price projections until the pandemic came.

“I’ve preached about cost overruns, and this has got to be handled better,” said commission chairman Britt Blackwell, who served on York County Council during the past two Pennies campaigns. “And to (the county’s) credit on Pennies 4, before COVID hit — five projects under budget, under cost.”

If Pennies doesn’t collect as much money as anticipated, or enough to cover the prioritized project list, then jobs on the bottom end wouldn’t be funded. They could carry over to another Pennies campaign, the way that $225 million worth of work will this fall.

If Pennies collects more money than it needs to complete the list, the extra revenue would carry over to a later Pennies campaign if there is one.

If not, York County Council could put the money toward road projects at its discretion. That’s a departure from past rules where the tax would have to stop collections if the list was complete, something the citizen commission said helps in forecasting the new projections.

“The money doesn’t get wasted,” Madden said. “It doesn’t get lost. It’s going to go to roads, period.”

Conservative cost estimates for road work

Pennies director Patrick Hamilton had county engineering staff come up with estimates for road projects.

They range from small repaving jobs to the almost $45 million widening of U.S. 21 in Fort Mill from Sutton Road to S.C. 160. The county priced even larger projects that didn’t make the list.

There’s a fine line between caution and being overly conservative, Hamilton said, which means the county doesn’t get all the road improvements it could get. “I’m trying to be realistic, on the conservative side,” Hamilton said.

Even without a pandemic, road materials and labor costs can shift with time. Forecasting costs up to seven years out is a difficult task.

“This is not an exact science and I think the citizens at this point understand that,” Madden said.

The fall Pennies list doesn’t have the amount of large road widening or new road projects that made past ballots. There’s too much outstanding work that needs to be funded, Blackwell said.

“We want Pennies 5 to kind of be the cleanup Pennies situation for all the inflation damage and COVID damage,” he said. “That’s kind of the position we’re in, being in the red $225 million.”

If it works the way the commission hopes it will, a Pennies campaign this fall will set the stage for decades of road work.