In a split decision, the S.C. Supreme Court last week dismissed an appeal of one of two cases brought against the city of Myrtle Beach by the Tourism Expenditure Review Committee, saying the case should not have been pursued in Circuit Court to begin with.
The case, which was to determine if Myrtle Beach properly spends the money it receives from the accommodations tax, was referred back to the Administrative Law Court on May 8.
TERC was appealing a case in which it was determined that the city’s use of accommodations taxes to pay for services – such as police and fire protection – was a legal expenditure. TERC had not officially opposed Myrtle Beach’s use of accommodations tax money or requested the state withhold the funds, so the Supreme Court ruled there was nothing to decide.
State law requires hotels and other temporary lodgings to charge a 7 percent accommodations tax, with 5 percent going to the state and the remaining 2 percent going back to the county or municipality where the lodging is located.
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That 2 percent is to be used for tourism-related expenditures, such as advertising. TERC is the oversight group set up to determine whether those expenditures are proper.
“It was a theoretical issue to begin with that the court said shouldn’t have been handled in this manner,” city spokesman Mark Kruea said.
It is unclear if TERC will pursue the case in the Administrative Law Court.
“The members of TERC is still reviewing the opinion with its attorney and has no comment at this time,” said TERC staff member Damita Jeter in an email.
The Supreme Court heard the case in January, as well as a second case that concerns TERC withholding money from the city because the committee disapproved of the way the funds were spent. A decision has not yet been given in that case.
The state’s Court of Appeals dismissed the second case brought against Myrtle Beach, saying legislation that was passed since a fireworks show was held in 2003 makes the issue a moot point. TERC is appealing the dismissal.
In 2003, the city used $20,000 in accommodations taxes for a fireworks show that was produced by for-profit entities. Also that year, the city spent $10,000 in accommodations taxes to help advertise a fall motorcycle rally that was sponsored by a for-profit business.
TERC ruled in 2004 that both expenditures were improper because the money went to for-profit entities and ordered the S.C. Treasurer’s Office to withhold $30,000 from the city’s future accommodations tax disbursements.
The case has worked its way through the judicial system to the appeals court, but in 2006 the state legislature passed a law requiring accommodations taxes withheld by the treasurer’s office prior to July 1, 2006, be returned to the entity from which they were held.