North Myrtle Beach refuses tourism sales tax a council vote

North Myrtle Beach City Council attempted to balance the input of residents and its relationship with the local chamber of commerce Friday as it decided to defer on passing a 1 percent sales tax for tourism advertising.

The issue, the center of discussions between council and the North Myrtle Beach Chamber of Commerce for months, was raised in a May 5 letter from chamber board member Bill Griste. The chamber requested that council pass the additional 1 percent sales tax, sometimes referred to as a Tourism Development Fee, by a supermajority of five members of the panel.

Instead, the council decided in a workshop that it will send a letter to the chamber denying that request. The tax can also be passed by referendum, but Mayor Marilyn Hatley said it is too late to add an issue to the November ballot. The soonest the tax could go up for a referendum would be in January or February.

“I think we would do a special election for that,” Hatley told The Sun News. “Let the people speak.”

Council would have to approve an ordinance twice to bring a referendum to a ballot, city spokesman Pat Dowling said. However, he said, council already agreed to wait on presenting residents with a referendum while Horry County presents a referendum on the Ride III tax, a 1 percent transportation funding sales tax.

“[The city agrees] we shouldn’t step in at this point and cloud the issue,” Dowling said.

Revenue from a tourism sales tax, which Myrtle Beach implemented in 2009, would go mainly to the local chamber, which would have to use it to fund out-of-market advertising for North Myrtle Beach. Up to 20 percent of the revenue could be used for property tax relief, and any remaining money would be available to the city.

Multiple council members called the chamber’s letter more of a demand than a request, and members agreed that the city would be better off implementing a sales tax that would only fund improvements such as stormwater disposal, expanded parking and beach renourishment, rather than earning a small portion of the tourism tax revenue. Such a tax would have to pass the state legislature before North Myrtle Beach could implement it by referendum.

“When I ran businesses for GE, I would never think about running a promotional sales campaign to get short-term profits when my products were not up to the competition,” Councilman Bob Cavanaugh said. “We’re in a position right now where our infrastructure is way below par.”

By the midpoint of the meeting, Cavanaugh made a point to correct the tone of the remarks, saying that he respected the partnership between the city and the chamber. “I probably was too focused on the question before the board today in my initial comments,” he said. “[The chamber] are really good people.”

Several residents voiced opposition to the tax. North Myrtle Beach resident Chuck Collins said residents shouldn’t be on the hook for advertising, and argued that much of the population of North Myrtle Beach is retired and lives on fixed incomes that would be adversely impacted by an additional sales tax.

“If I own a business, it is incumbent upon me to pay for my own advertising,” Collins told The Sun News.

Griste, who was the chairman of the chamber until this month, said the additional advertising would increase tax money the city receives through other means, like the fees visitors pay on hotel bills. He said this increased revenue would make it less likely that the council would have to raise property taxes.

“You’re getting more money from the business community, and it will perpetuate and increase,” Griste said.

But a few speakers took issue with the chamber’s first preference to pass the tax by supermajority. Resident John Barnett said having the council approve it without giving residents a chance to have their say through a referendum would have been unfair.

“The chamber, I agree, they’re needed, but it wasn’t a very appropriate way to try to fly under the radar and go ahead and get the city council to vote this thing,” Barnett said. “The public hardly learned anything about it, except in the last few weeks.”

Griste, however, said the chamber was not trying to hide its effort to get the tax passed.

“There’s a lot of us against them,” he said.

Dolly McDermott, a travel consultant who has been a resident of North Myrtle Beach for 13 years, said implementing the tax would ensure an immediate source of money to the city while the state mulls the tax for infrastructure improvements.

“In South Carolina, anything can take from six months to 25 years, and that’s the truth,” she said. “So what we think we will get next year could be 10 years down, and we cannot wait.”

McDermott was also a member of an advisory committee commissioned by the city to study the tax. The group met “four or five times” this spring, McDermott told The Sun News, and recommended implementing the tax.

Rick Elliott, a resident of North Myrtle Beach who also owns Elliott Beach Rentals, argued that the tax would ultimately support residents.

“I think we lose sight of the fact that this provides residents with property tax relief,” he said.

After Elliott finished, City Manager Mike Mahaney said that at the basic level of tax reimbursement allowed under the tourism sales tax, residents would receive $48 in tax rollbacks on a $250,000 home.

“We felt like that just wasn’t a great enough benefit for you as citizens to feel that big a difference in your tax bill,” Hatley said.

City officials have previously discussed implementing the tax at a half a percent, and both council members and chamber President Marc Jordan have confirmed that the chamber refused that option. Council members were ultimately opposed to implementing the full level by themselves.

Councilwoman Nikki Fontana said, “As a businessperson, if somebody’s offering you money, I feel like you either take that or you don’t.”

This story was originally published July 29, 2016 at 12:41 PM with the headline "North Myrtle Beach refuses tourism sales tax a council vote."