Gov. Haley vetoes Myrtle Beach proviso to divert ATAX to general fund

MYRTLE BEACH, SC (WMBF) – Governor Nikki Haley approved the use of accommodations tax funds specifically for law enforcement within Horry County in May 2015, but she vetoed another proviso on Thursday that would have returned funds that the city attempted to divert from ATAX into its general fund.

The veto was one of 76 budgetary vetoes (PDF - Veto 25) that Gov. Haley passed on Thursday. The explanation for the veto states that the Supreme Court ruled that the City of Myrtle Beach had illegally diverted hundreds of thousands of dollars of accommodations tax proceeds directly into the city's General Fund. Gov. Haley's veto states that she was "rejecting irresponsible budget practices."

"The legislation which Governor Haley vetoed was intended to return $300,000 in Accommodations Tax money to the City of Myrtle Beach," stated Mark Kruea, a spokesman for the City of Myrtle Beach.  "The Tourism Expenditure Review Committee withheld the money from the city's Accommodations Tax funding, and that decision ultimately was upheld by the Supreme Court."

In May 2013, the State Supreme Court rejected the City's appeal on the decision (PDF), arguing that ATAX funds are to be spent on tourism-related expenditures, at the discretion of the Tourism Expenditure Review Committee.

"The accommodations tax exists to promote tourism and related industries, not to subsidize local government's own operations," the veto states. "There are longstanding penalties in permanent law for local governments that misallocate these funds."

Mark Kruea explained the city's position: "Rather than have the state keep the money, lawmakers voted to return it to the city, where it was generated.  The city would have directed the money back into the Accommodations Tax review process, including the advisory committee, so that it could have been re-awarded for various tourism promotion projects."

"This proviso is essentially a get-out-of-jail-free card for municipalities that are caught breaking the law, because it would allow those local governments that are caught misusing these funds to put the money back where it belongs, without penalty," Gov. Haley's veto continued. "I have vetoed this proviso because it circumvents the Supreme Court's ruling and undermines the law."

"This legislation would have returned the money to where it was generated, to be put to the use for which it was intended," Kruea added.

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