Improved accountability reports a work in progress for Chamber of Commerce

The Myrtle Beach Area Chamber of Commerce has not yet separated the tourism marketing expenditures it makes with public money from those it makes with private funds on its quarterly spending reports, following a City Council directive more than a month ago to more clearly show how millions of dollars from a local-option 1 percent sales tax are being spent.

Cherie Blackburn, a lawyer representing the chamber, said the group is working to “enhance the public reporting,” but did not say when that will occur. City spokesman Mark Kruea said the chamber faces challenges in separating the expenditures but could have a new reporting system in place for the fourth quarter.

John Crangle, an advocate for government transparency and accountability, said he questions why the chamber hasn’t been tracking the public money separately all along. Crangle – executive director of Common Cause of South Carolina – said the chamber should not have to spend months after the fact trying to figure out where and how it spent public money.

“That should be monitored on an ongoing basis,” Crangle said. “It seems their accounting system is really primitive if they can’t readily separate the source of the funds.”

Brad Dean, the chamber’s president and chief executive officer, did not respond directly to The Sun News but had Blackburn answer emailed questions. Richard Singleton, a sales associate with Coldwell Banker Chicora Real Estate and chairman of the chamber’s board of directors, would not answer questions following a chamber board meeting last week.

The chamber mixes public and private funds in the same bank accounts and regularly combines public and private money for some marketing expenses. That means the sales tax portion of those expenditures must be parsed from the overall total to comply with the council’s directive.

Richard Eckstrom, the state’s comptroller general, said “it would be an extremely easy fix to set up a separate bank account for public money.”

Eckstrom, who acts as a watchdog over state government spending, said reporting the expenditures separately should be simple.

“If it’s a priority for the chamber, they could do it in short order,” he said. “If public funds are being spent, those public funds ought to be easily identifiable.”

An example of the chamber’s comingling of public and private funds is a $24,935.66 payment it made to Starboard Communications Inc. during the third quarter of this year.

Walter Whetsell – the president of Starboard Communications, a Lexington political consulting group – said the chamber hired his firm to produce advertisements in Washington, D.C., area publications to “target young, professional, Capitol Hill staffer types to look at Myrtle Beach.” Whetsell said the ads promoted airline flights from Washington, D.C. to Myrtle Beach.

While the chamber included a line item on its recent report showing the expenditure to Starboard Communications, the enhanced reports requested by the city would specifically state how much public money of the $24,935.66 was used for the advertisements.

Another challenge, Kruea said, is that the chamber does not always spend sales tax – or Tourism Development Fee – revenue in the same quarter that it receives the money.

“Most of the TDF money is generated during the peak season, but I suspect that most of it is spent in the offseason,” he said. “And that’s one of the complications to consider when breaking out TDF revenues and expenditures separately. I anticipate that the new reporting will include some sort of ‘fund balance,’ showing either a positive or negative dollar amount reflecting TDF revenues spent, or unspent, as of the date of the report.”

Kruea said city officials expected there would be a delay in the move toward a more comprehensive report.

“It will take work to list the TDF revenues and expenditures separately, and the chamber is headed in that direction in response to city council’s October motion,” Kruea said. “The city is more interested in accuracy than immediacy. If it takes a little longer to get everything in the right place, that’s preferable to creating unnecessary confusion by rushing to meet an imaginary deadline.”

Kruea said the chamber also might “retrofit” earlier reports to separate the revenues and expenditures from the sales tax, which began in July 2009.

Some residents say they are less concerned with the nuances the chamber says it must follow to compile the reports and more focused on who is getting tax dollars and why.

Cheryl Case, an area resident who has been critical of the chamber’s accounting, said public money and private money never should have been comingled.

“The use of funds and the spending of public vs. private money needs to be differentiated so we can know how tax money is being spent,” Case said. “There’s no excuse for not separating the money. Any simple office system would be able to keep the accounts separate.”

The most recent report shows the chamber received $5.4 million in public money during the third quarter of this year. Most of that money – $4.3 million – came from a 1 percent sales tax for tourism promotion the city approved without a voter referendum in 2009. The city gives the chamber revenue from that tax and the chamber is supposed to spend it on out-of-market advertising.

To date this year, the chamber has received $12.2 million in public funds including $7 million from the sales tax.

The Myrtle Beach City Council told the chamber in October that it wants revamped quarterly reports that more clearly show how millions of dollars collected each year from the sales tax is spent. The council’s action followed reports in The Sun News this year that showed the chamber’s reports to date have made it impossible for the public to tell how tax dollars are being spent because all expenditures – public and private – have been lumped together with no explanation of their revenue source.

The reports also have included discrepancies over how some money has been spent.

For example, the chamber reported on its fourth-quarter 2010 report that it spent $300,000 to market the Coastal Uncorked wine and food festival. Dean told city officials earlier this year that most of the $300,000 was spent on advertisements promoting Coastal Uncorked in Southern Living magazine. However, documents obtained by The Sun News showed the chamber paid for those ads months earlier and from a separate account. The chamber has not yet corrected that error on its quarterly reports.