The S.C. Supreme Court ruled Wednesday that the city of Myrtle Beach did not adhere to state rules when it spent about $300,000 in accommodations tax money.
The justices said the city improperly put the money into its general fund and then used it to cover tourism-related public services. The money was only a fraction of the more than $6 million the city received in accommodations tax revenues in the 2008-2009 fiscal year.
“We’re reviewing the decision,” city spokesman Mark Kruea said. “We’ll take a good look at it and determine if we want the court to hear the case again. … It appears it was a deeply divided decision.”
The statewide Tourism Expenditure Review Committee had challenged four grants to outside entities covered by the $300,000 but a state administrative law judge ruled for the city.
The justices reversed that decision in a 3-2 ruling, saying technically the law had not been followed. But the majority said they recognized the challenged grants were for tourism services as required by law.
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.
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.
According to the decision, Myrtle Beach transferred $302,545 to accommodations tax funds to the city’s general fund, which bypassed the S.C. Accommodations Tax Act’s provisions. TERC invoked its authority and said the expenditures were noncompliant and a majority of justices agreed.
The opinion, written by Justice John W. Kittredge, pointed to an internal memorandum that stated, “council decided to sweep accommodations tax funds to the general fund to cover tourism-related public services.” Kittredge wrote that by moving those funds, the city did not comply with the accommodations tax act.
Attorneys for TERC could not be reached for comment Wednesday.