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Sales tax revenue exceeds Myrtle Beach hopes

Myrtle Beach collected more in the past 10 months in sales tax revenue than its finance gurus believed possible - a sign, they say, that the city is recovering from the recession.

The controversial 1 percent sales tax for out-of-area tourism promotion, implemented Aug. 1, has raised $14.2 million in 10 months. The 12-month projection was $15 million.

The total raised so far does not include collections for June and July, the city's two busiest months.

"We have the great pleasure of having our business community letting us know that the 1 percent tax is really working," Mayor John Rhodes said Tuesday after budget director Michael Shelton and finance director Maria Baisden made their presentation of monthly financial statements to the city.

Myrtle Beach recently received its latest quarterly payment of the sales tax collections from the state - $4.9 million collected in March, April and May. That check was 32 percent more than Shelton estimated the payment would be, and pushes the city 11 percent ahead of the overall first-year tax-collection projection.

"It's pretty evident that our economic recovery has taken place in an accelerated fashion," Rhodes said. "We can now safely say this is a direct result of the advertising the Myrtle Beach Area Chamber of Commerce has done with the tax money."

The quarterly collections so far:

For August | $1,987,892

For September, October and November | $3,967,742

For December and January and February | $3,408,100

For March, April and May | $4,883,067

Many residents complained about the tax, especially in a down economy, but the city said the chamber had to be competitive with other resort towns, and there was no other way to get the money because the state has cut tourism-promotion funding.

The council heard many complaints at first, but now North Myrtle Beach is considering enacting a similar tax, and Charleston and Hilton Head Island lawmakers are asking the state legislature to allow their areas to implement the sales tax, too.

The tax is designed to raise money to promote the area to potential visitors, and for the first year, the chamber gets all the cash.

The chamber has used most of it to reach potential visitors in markets within an eight- to 10-hour drive, as well as a little farther out, in places such as Chicago and the Northeast.

Rhodes said since the oil spill in the Gulf, the city has not - and would not - advertise with the goal of taking away visitors from the affected region, though he recognizes some of the area's visitors are from there, avoiding areas they believe contaminated.

But, Rhodes said, many of those visiting the area for the first time this year came from other places and were not driven here by the problems in the Gulf.

After the first year of the 10-year tax, the city keeps 20 percent, and must use it for only two purposes - to give resident property owners a tax break and to pay for tourism-related projects.

Council members elected to give property owners a nearly 90 percent city property tax break, and anticipate issuing $2.3 million in tax credits this fall. The city will keep about $90,000 of its share for tourism-related projects, though Shelton said if the 11 percent increase holds, the city will have about half a million dollars to spend on such projects, though the council hasn't discussed what those projects will be.

Shelton said the increased sales tax revenues are evidence of economic recovery, and he's interested to see what the collections from June and July will amount to. The quarterly check that includes collections from those two months and August will arrive in September.

"People must be spending money," he said, "because retail sales are up."

At Tuesday's meeting, council members heard from local cab drivers on a different subject, but Charles Moore, representing the Independent Cab Association, said he and other drivers are seeing improved income this year.

Councilman Phil Render seized on Moore's presentation to ask about how business was going despite the loss of the May motorcycle rallies, pushed out of town last year when the city passed a series of ordinances and amendments designed to gain control again over the large events.

Moore said this is the first year he has made money in many years.

"I can afford to buy clothes this year, and I haven't been able to do that in a while," he said.

Render said he was surprised the sales tax collections were as high as they are, and said he's excited about the prospects for businesses in Myrtle Beach.

The sales tax directly enabled the city to build its new, $6 million boardwalk, because now that the chamber has the sales tax revenue, it gives back to the city about $850,000 a year in accommodations tax revenue it needed for promotions.

The city used that money to issue construction bonds for the city's newest amenity, which many downtown business people are calling a smashing success.

"Many of the people who doubted the decision to build the boardwalk have now come to us and said they were wrong," Rhodes said. "Now, they say it was a great idea."

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