What does the 1% tourism tax pay for?

WMBF News Investigates: 1% Tourism tax

MYRTLE BEACH, SC (WMBF) - The 1% tourism tax is arguably the most controversial decision made by Myrtle Beach City Council in recent years.

Now in its third year, spokesman Mark Kruea says the local tax collected more than $24 million so far in 2012. Where is the money going?

The Myrtle Beach Area Chamber of Commerce regularly airs commercials touting the benefits of the tax. The commercials are an act of transparency on the chamber's part. In fact, there's a commercial airing right now on WMBF News showing increases in almost every aspect of tourism.

The ad, which compares this year to 2009 (when the tax was enacted), claims numbers from the South Carolina Department of Revenue show increases in retail sales, admissions and hospitality.

"The initial focus in 2009 and 2010 was to protect our summer season, that's key to the industry," Brad Dean, president and CEO of MBACC, says about the chamber's efforts in the first two years of the tax.

Ray Booth, general manager of the Oceans One Resort, agrees current numbers might show increases, but says the reason why is not as simple as the ad portrays.

"Myrtle Beach in itself is growing so the tax base is growing, so even if you didn't have any increase in visitors, if the business was growing and we were spending more money then they're bringing in more revenue as far as taxes go" Booth says. "[But] is the average number of tourists gaining or are they just spending more?"

Booth says it is easy to see an increase in numbers when you compare them to 2009, when the economy was stalled. Dean admits we are seeing a recovering economy and people spending more money, but he says this area would be worse off if the tax wasn't implemented.

"We saw a dramatic drop off in 2009 and it could have been much worse if we hadn't acted quickly and invested additional dollars in tourism promotion," Dean warns. "I think one of the most positive signs of this [tax] is millions of new, first time visitors that have come here for the last three years and we know that once they come and have a great experience they'll come back."

WMBF News pulled the numbers for several years of the South Carolina 5% admissions tax. It's collected at tourist hot spots like golf courses, amusement parks, water slides, movie theaters, craft shows and nightclubs. Horry County collected more than $9.3 million during the 2005-2006 fiscal year but in the most recent year, collections are still down by at least half a million dollars from what Booth considers the peak years (2005-2006).

"It's not that I think the money isn't working, obviously the more money we can spend on advertising to bring people down here the better it's going to be for our economy," Booth says. "Yes they've been increasing for a couple of years but they have not reached all time highs for what we did."

The commercial also claims lodging is set to hit another all time record this year.  Booth disagrees. He says lodging at his properties won't be hitting an all-time record; they're busy trying to keep rooms rented because vacations have changed.

"The length of stay has actually shortened. Instead of people coming down and staying six or seven nights, they're staying four and five nights."

Booth also says the Internet has changed the way vacationers plan their trip.

"People used to book 4 or 5 months in advance, now they're booking four or five days in advance."

There are several different ways to measure lodging and one of them is the statewide 2% accommodations tax.

"If you really want to look at lodging revenues, the simplest is the accommodations tax," Dean says.

Here's a breakdown of Horry County's accommodations tax collections over recent years from the SC DOR:

FY 05-06: 14,239,738

FY 06-07: 14,658,814

FY 07-08: 15,405,603

FY 08-09: 14,407,623

FY 09-10: 13,625,656

FY: 10-11 15,379,987

You can see a major drop off in 2009-2010 but then a jump of almost $2 million in 2010-2011.

"It's a percentage of revenue, so if it's going up, that means more revenues have been collected and so we know last year they set an all time record," Dean says.

The commercial also makes a bold claim about adding more than 650 new, full time jobs. Dean says these jobs are mostly in the service sector in Horry and Georgetown counties. Booth doesn't see a reflection of that number in the businesses he oversees.

"We employ about the same number of people every year," Booth says. "Now as new businesses come on, they're going to have to hire people, but 650 jobs is still not a huge impact in an area the size of Myrtle Beach and most are low paying jobs."

Dean believes the tax will also spur tourists to make a permanent move to the area after visiting; and living in Myrtle Beach would be affordable, with the nearly 90% reduction in property taxes. It's a benefit of the tax and one of the biggest property tax breaks in the history of the state.

But one record breaking claim you won't see this commercial boast about is this year's airport numbers.  In fact, the ad shows numbers increasing in the beginning years of the tax but there's no mention of it at the end. 2012 has not been a good year for MYR.

"Unfortunately, with the decline in Spirit Air routes and also the loss of Direct Air, there are fewer planes coming into the market," Dean explains. "We're optimistic that in 2013 we'll see new routes and perhaps a new airline come in and that will help us increase more people."

Dean says advertising is focused on markets that already have routes to Myrtle Beach and markets where they are trying to secure routes.

Booth believes the economy will rebound on its own.

"As the economy improves, the people who work paycheck to paycheck that visit Myrtle Beach are going to come back. I think it will take care of itself."

By law, 80% of the tourism tax funds must be used for out of state promotion. The other 20% can only be used for reducing property taxes and funding tourism related infrastructure in the city.

Besides the commercial, the MBACC operates a website, in another act of transparency, so taxpayers can check to see where the money is going at any point.

Copyright 2012 WMBF News. All rights reserved.