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‘We are unable to engage’: Rift over hospitality fee funds continues for city, county

I-73 funding depends on local municipalities working through tax allocations

Myrtle Beach City Council passed a motion Tuesday morning in support of I-73 and intergovernmental negotiations to fund the project from jurisdictions directly benefiting from construction of the interstate.
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Myrtle Beach City Council passed a motion Tuesday morning in support of I-73 and intergovernmental negotiations to fund the project from jurisdictions directly benefiting from construction of the interstate.

The rift between Myrtle Beach and Horry County will continue after city officials rejected the county’s offer to negotiate the use of hospitality fee funds.

During a special meeting Wednesday morning, Mayor Brenda Bethune announced the city would not engage in negotiations over hospitality fee funds due to the existing lawsuit between both entities. Horry County Council recently sent letters to town and city officials who voted to take control of its accommodations and hospitality tax from the county, suggesting the county should reclaim control over the 1.5 percent hospitality fee.

County officials believe the decision made by Myrtle Beach, North Myrtle Beach and Surfside Beach threatens local funding for the construction of I-73, but Bethune disagrees.

In Bethune’s April 10 letter to county council chairman Johnny Gardner, she states the county’s proposal will essentially double tax city residents by collecting a service fee that city property owners already support through their taxes.

“Since the proposed funding source is the subject of litigation, we are unable to engage in negotiations under the terms described in your letter and related documents,” Bethune’s letter states. ““Even if the fee were legal, we see no benefit to our constituents from that arrangement.”

The ongoing debate over the allocation of taxes started in February when Myrtle Beach approved an ordinance restricting the county from collecting a portion of the city’s hospitality and accommodations taxes. A 20-year agreement between both entities authorized the county to impose a 1.5 percent hospitality fee and collect accommodations taxes within its corporate limits.

But that agreement expired in 2017, and now Horry County stands to lose over $20 million a year in hospitality taxes.

While the city filed a lawsuit against Horry County last month claiming it illegally collected millions of dollars for road projects in which it didn’t agree to — most notably the construction of I-73 — through the hospitality tax following the agreements expiration date, city officials want to conduct private meetings with the county and neighboring municipalities to fund I-73.

However, Gardner believes any discussions regarding taxpayer money should be handled in public, and the county council voted against the city’s proposition at their Apr. 2 meeting.

They also voted unanimously on a resolution to continue collecting the 1.5 percent hospitality fee, but dividing up the $40 million it generates annually. The offer would give $18 million to the construction of roads, notably I-73, with the county taking $9.8 million. The remaining $14.7 million would be divided up amongst the municipalities.

While Gardner said their plan gets the most amount of money to all areas of the county, he said if the city is unwilling to negotiate in public, they will break their near $20 million annual deal with S.C. Department of Transportation to fund their portion I-73.

Bethune said the city is committed to supporting I-73 through private discussion, adding that the county’s proposal is both unfair to constituents and legally questionable.

“Our belief is that each jurisdiction is best suited to determine the use of its own revenue,” Bethune said.

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