June 8, 2013

Editorial | 30 years later, accommodations tax use still contentious

A state Supreme Court ruling May 8 shows that in the nearly 30 years since the accommodations tax law was passed, its provisions are still vague enough to provoke frequent fights over use of the funds.

A state Supreme Court ruling May 8 shows that in the nearly 30 years since the accommodations tax law was passed, its provisions are still vague enough to provoke frequent fights over use of the funds.

In its opinion, the high court vindicated Myrtle Beach in a dispute with the statewide Tourism Expenditure Review Committee. The court noted it isn't the first time the city has been in a dispute with the panel that was formed to oversee how the money is spent.

The justices reiterated that locations with a high concentration of tourism, as specified in the law, may spend more than some other locations on services including criminal justice, law enforcement, fire protection, solid waste collection and health care, provided the expenditure is based on a percentage of tourism.

And that is essentially what the law was about, in its original concept: that communities heavily impacted by tourism should be able to use accommodations tax, collected from those very tourists, to support services such as additional police, or restrooms, or whatever is needed.

But in the intervening years, many officials have come to believe the money is supposed to be spent on tourism promotion alone, or only on activity that puts “heads on beds.''

It was Myrtle Beach that for years demanded authority from the state to raise additional funds to support the demands of tourism. At the time, the city's 12,000 or so residents were the only tax base available. Why should those property owners have to pay the costs, say, of a police department fit to handle the 500,000 people who came in the summer? Or the court personnel needed to handle the resulting cases?

This was a sore point for the city and its residents, who opposed property tax increases just to pay for a bigger police department they didn't need for eight months of the year. North Myrtle Beach and Surfside Beach experienced the same pressures, and so the did Horry County in the unincorporated sections such as Garden City Beach.

Cities and counties can impose only the taxes the Legislature allows, and there was no answer to that dilemma other than an accommodations tax.

For eight years, lawmakers fought over the tax. Original proposals were to use it for property tax relief and for general government expenses. The tourism industry and many businesses opposed that notion, saying the tax should go to needs created by tourism, and to advertising to get more visitors.

Parts of the state that do not have tourism blocked the bills, saying they would get nothing while their residents would have to pay the tax when they went to the beach.

As the legislative session began in 1983, the late state Rep. Harriet Keyserling of Beaufort took up the cause. She was the lead sponsor of the bill. Rep. Pete Pearce of Myrtle Beach and Rep. Lois Eargle of Aynor were among the co-sponsors. Also a sponsor was Rep. Jean Toal of Columbia, now the chief justice of the state Supreme Court who no doubt has a keen eye when legislative intent is examined in A-tax disputes.

Tourism interests led by people such as Ashby Ward, the late president of the Myrtle Beach Area Chamber of Commerce, helped build a coalition of supporters, as long as the money would not go to the general funds of the cities and counties but would have to be used for tourism promotion.

Keyserling helped broker a compromise with lawmakers from the non-tourism areas with the Robin Hood clause: every county would receive at least $50,000.

The law passed in 1984 and imposes a 2 percent tax on accommodations, including hotel rooms and campsites. That is in addition to regular sales tax that is also charged on accommodations.

For counties receiving more than the minimum, the first $25,000 goes to the general fund without restriction. Of the rest, 5 percent goes to the general fund; 30 percent goes to a designated tourism promotion agency; and the remaining 65 percent is for “tourism-related'' expenditures. Although the law attempts to specify what those are, cities and counties continue to fight over the specific meanings.

For example, when can the money pay for Fourth of July fireworks? Apparently, if the display is promoted as a tourist-oriented event and not just a celebration for local residents.

Many arguments have occurred over payments for arts and cultural events, but the law specifically includes them as long as they are promoted to possible visitors. Keyserling said in her autobiography, “Against the Tide,'' that she viewed the tax as a way to help get funding for arts events, and that is why someone from the arts community must be included in the members of the required local accommodations tax committees. The committees recommend how the money is to be spent.

The law also specifies that money can be used for beach renourishment and to build tourism-related facilities such as convention centers.

The law has been good to tourism-impacted areas of the state, but it could be better with a clearer understanding that much of the money is to help with those tourism impacts, and is not solely set aside to advertise to bring in more visitors.

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