The Gervais Bridge in Richland County, S.C., where a judge has said that the South Carolina Department of Revenue must turn over frozen distributions of the county’s special sales tax for transportation.

BRADENTON, Fla. - A South Carolina judge has indicated that he plans to side with Richland County in its fight for 1-cent sales tax revenues being held by the state Department of Revenue.

Richland County said it was notified by the clerk for Judge Thomas Cooper on Wednesday that he plans to order the state DOR to release the county's penny sales tax revenues.

Distribution of the county's quarterly collections was frozen by the DOR amid a probe of spending irregularities that the agency said it found during an audit of the 1-cent sales tax approved by voters in 2012 for transportation improvements.

On Tuesday, Cooper heard arguments from attorneys in a petition filed by Richland County asking the court to order the DOR to release the quarterly payment due in July, which is estimated at $17 million.

"County officials are awaiting the signed order," Richland County said.

The DOR said in a statement that it is waiting for the judge's complete ruling before responding to the clerk's notice.

"We look forward to a final resolution that ensures what this effort has always been about – protection of taxpayer dollars," said the DOR, which collects the tax and remits the revenues to the county quarterly.

In May, the county set aside funds to pay off a $50 million bond anticipation note maturing in October after the DOR held up tax distributions.

Moody's Investors Service said the move was credit positive because it ensured that investors would not be at risk of non-payment. Moody's rates the BANs MIG-1, and S&P Global Ratings rates them SP1-plus.

The BANs are general obligations of the county backed by the 1% sales tax. The county planned to roll over the notes for another year and take them out with a long-term bond issue in 2017.

The tax is projected to raise $1 billion for transportation projects over 22 years. To date, more than 70 projects have been completed, according to the county.

The DOR began collecting the transportation tax May 1, 2013, and completed a seven-month investigation in December.

DOR Director Rick Reames said the Richland County Council had "misappropriated a significant amount of penny revenue," in a Dec. 3 letter to county administrator Anthony McDonald.

Reames also said that certain expenditures appeared to fall outside the parameters of tax laws and county ordinances, and that certain payments to the Project Development Team raised questions about "potential public corruption and fraud."

Reames letter didn't cite details about those payments, although the DOR's findings were turned over to the State Law Enforcement Division.

In addition to the inquiry, the South Carolina Public Interest Foundation notified the county in May that it intended to file a suit, according to The State newspaper in Columbia.

The watchdog group said it would attempt to block the county from spending any more transportation tax revenue until the county complies with local and state laws.

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