Decision by cities to change taxes would cost Horry County millions

ATax Fallout

HORRY COUNTY, SC (WMBF) - Three coastal cities have taken the initial steps to stop Horry County from collecting a 1.5 percent hospitality fee from inside city limits.

The hospitality fee is collected on prepared meals, admission and accommodations.

The county has collected this fee for more than 20 years and has used the countywide fee to pay off road projects planned under the initial RIDE I program.

Horry County Council member Gary Loftus said the funds have built Highway 22, Highway 31 and Robert Grissom Parkway, among others.

Horry County also collects a one percent hospitality fee from unincorporated areas. This year the county expects to generate $8 million for this fee to be used for public safety, public works services, and infrastructure impacted by tourism.

The county expects to generate more than $40 million from the countywide fee this fiscal year, according to its budget.

In July, the county council wanted to change a law to allow $18 million of the revenue collected from cities to fund public safety and to use $23 million for the construction of I-73.

However, Myrtle Beach, North Myrtle Beach and Surfside Beach recently took action to decrease the county’s fund and put the money in the control of individual cities.

On Tuesday, Surfside Beach was the latest city to vote to move forward with an ordinance to change how county and the city have divided money collected from tourism taxes.

Surfside Beach council member Randle Stevens said he thinks it is the smartest thing the city could have done and it’s time it gets its fair share.

“The county was taking advantage of a tremendous amount of revenue created by three cities on the coast line,” Stevens said.

Last week, North Myrtle Beach passed the first reading of a similar ordinance that cause the city to gain $6 million while the county loses $6 million.

“North Myrtle Beach has nothing to show for it. It only makes sense for the city to end that practice and use the money generated within its jurisdiction to fund projects and services allowed under the law to enhance life for its residents and visitors,” city spokesperson Pat Dowling said.

Dowling said the council thinks its time to use the money to do infrastructure projects the city has been unable to work out with the county.

This came two days after Myrtle Beach unanimously voted on an ordinances that would keep money collected inside limit limits in control of the city.

The city estimates more than $13 million dollars would be generated for the city from the changes.

If approved, the ordinances would not increase taxes and would come into effect on July 1, 2019.

Myrtle Beach said an agreement with the county related to this fee ended in 2017, however county council member Gary Loftus questioned what agreement it is referring to. The city did not immediately have the agreement on file and said to check with the county.

Loftus said cities were for the fee before it was implemented in the late 1990’s.

"I went around to ever town council and every city council to sell this program and they were all excited about it,” he said.

Many county council members voiced frustration on the topic during the special-called Tuesday council meeting.

“I don’t know if this wasn’t by design, but what we’re doing today is wasting government resources on an issue that is far less important than the real crisis we’re facing as a county council right now,” county council member Dennis DiSabato said on Tuesday.

Loftus said the county paid back all the road project and was looking to use future funds from the hospitality fee for I-73.

“We’re going to have to look really hard about this because we know one thing, no matter who is collecting this money, the way it is going to be set up.. our pool is going to drain at least $12 million,” said Horry County Council Chairman Johnny Gardner.

Gardner said on Tuesday the county could “kiss I-73” goodbye if the ordinances are approved.

U.S. Congressman Tom Rice said he’s spoken with city officials and their objective is to solidify I-73 funding.

“We will continue to working at the federal, state and local level to identify the best funding options to build this essential road,” Rice said.

Myrtle Beach spokesperson Mark Kruea said the city has not decided how it would spend the additional money.

“The city of Myrtle Beach, not Horry County, will determine how that money ultimately is spent. City council may decide to spend all or part of it on I-73. That decision hasn’t been made. I don’t think council’s even had that discussion yet,” said Kruea.

Myrtle Beach City Council will meet in a special-called meeting on Thursday morning. The meeting comes days before their regularly schedule meeting.

When asked why the meeting was necessary, Kruea said that’s just when council wanted to do it.

Kruea also responded that some things take time when asked why the topic is being brought up two years after the city and county agreement expired.

Loftus said he has tried to reach out to talk to the city but has not had any luck.

"I called and said let's get together I want to talk about this thing, 'oh, I'll get back to you,’” Loftus said. “I'm waiting. They have shut the door on us."

Myrtle Beach council members initially said they would be willing to speak with council members after last week’s meeting.

County council member Johnny Vaught also thinks cooperation and talk is needed.

“We don’t need individual municipalities going off on their own and doing their own thing because this whole county has to stick together,” Vaught said.

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