By Paul Gable
A proposed ordinance by the City of Myrtle Beach regarding collection and distribution of Hospitality Tax should end the I-73 funding agreement between the county and SCDOT that was approved late last year.
In the proposed ordinance, the city declares the 1.5% countywide hospitality tax passed by Horry County in early 1997 to have ended in 2017 when the county voted to extend the law beyond its original sunset provision.
The 1.5% countywide tax was used to pay off Ride I bonds. The last payment on Ride I bonds was made in January 2017, according to county sources.
With that final payment, it appears that the 1.5% countywide tax is no longer allowed by state law. It appears the county did not receive proper legal advice on its ability to remove the sunset provision and continue collecting 1.5% countywide.
Current state law allows counties to impose only a 1% countywide hospitality tax. Any more to be collected within municipalities must be approved by the municipality by resolution, which obviously is not going to happen in Myrtle Beach.
Myrtle Beach appears to believe it can collect the entire 2% local hospitality tax allowed by state law for its own use.
However, if the county moves forward to impose a 1% countywide hospitality tax, Myrtle Beach will probably end up with only the same 1% hospitality tax revenue it currently receives. Some legal wrangling between the two governments can be expected before this issue is finally resolved.,
While that legal wrangling is going on and until the county imposes the proper 1% countywide hospitality tax, the county will not be collecting enough funds to fully fund the up to $25 million that is stated in the Financial Participation Agreement it signed with SCDOT on December 13, 2018.
In addition, county council must understand the complete uses it can make of hospitality tax revenue and how much funding it can put toward things like public safety, existing roads and infrastructure, recreation facilities and storm water mitigation.
The guidance county staff has given to county council on these uses appears to be intentionally more restrictive than state law allows.
There are more statutory limitations on the expenditure of accommodations tax revenue than hospitality tax revenue and the Tourism Expenditure Review Committee (TERC) only applies to accommodations tax revenue expenditures.
It is not out of the question that all of the 1% hospitality tax revenue can be spent on the types of immediate needs listed above rather than the I-73 boondoggle.
Regardless of the eventual outcomes of the issues stated above, due diligence on the part of county council demands immediate cancellation of the agreement with SCDOT.