By Paul Gable
Nearly two years ago Horry County Council voted to remove the sunset provision on the countywide 1.5% hospitality tax that was passed 22 years ago to pay for Ride I projects, in order to provide a long term funding source for construction of Interstate 73 within the county.
Two days ago, the sun set on the I-73 project when Myrtle Beach city council called BS on the county’s right to extend the tax beyond paying off Ride I bonds by unanimously passing first reading of an ordinance to keep all the hospitality tax collected within its corporate limits for its own projects.
Yesterday, word began circulating around the county that North Myrtle Beach and Surfside Beach would soon mirror the Myrtle Beach initiative by voting to keep hospitality tax revenues collected within their respective jurisdictions for their own uses.
Ending the county’s ability to collect a 1.5% hospitality tax countywide will force county council to immediately terminate a financial participation agreement it signed with SCDOT on December 13, 2018, to provide funding for the I-73 project.
It appears county council was seriously misinformed about its ability to continue to collect a 1.5% hospitality tax ad infinitum when it voted to end the sunset provision of the original law. As a result, available county funding for important initiatives may suffer a serious setback because of the greed of a few proponents of the I-73 project and the rush in which they moved to extend county hospitality tax collections.
According to state law, hospitality tax revenue must be spent primarily within the local jurisdiction in which it is collected.
State law allows for local governments to impose up to a 2% hospitality tax with counties able to enact a 1% countywide hospitality tax. However, the county cannot collect more than 1% within the municipalities without permission by the municipality.
Section 6-1-720(A) of state code provides: “A local governing body may impose, by ordinance, a hospitality tax not to exceed two percent…The governing body of a county may not impose a local hospitality tax in excess of one percent within the boundaries of a municipality without the consent, by resolution, of the appropriate municipal governing body.”
Each of the municipalities within the county approved the 1.5% hospitality tax by the county until Ride I bonds were paid off. The last payment for the Ride I bonds occurred in January 2019. The municipalities claim their agreement to the 1.5% countywide hospitality tax ended with that last payment.
More will be heard on this issue in the coming days. The municipalities want the entire 2% tax for themselves. The county will attempt to keep a 1% countywide tax in place. Arguments over “grandfathering” and other points of law will play out.
Both the municipal and county governments have valid arguments. The municipalities have projects they want to accomplish for which they need funding.
The county could use hospitality tax revenue to upgrade and mitigate against flooding on roads such as U.S. 501, S.C. 9 and S.C. 22, all of which need immediate attention and benefit both the unincorporated and incorporated areas of the county.
The $41 million the county expected to collect annually from the 1.5% countywide hospitality tax is gone. The county could realize as little as $5 million annually from hospitality tax revenues if the cities are completely successful in their arguments.
The actual numbers will probably fall in between those extremes. Whatever the final number for annual collections for the county becomes, it won’t be nearly enough to keep I-73 alive and we can finally put an end to the ridiculous idea that the county should provide hundreds of millions of dollars for an interstate road project.