Myrtle Beach’s budget woes, ‘desire’ for money prompt tax dispute, Horry County says

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.

Myrtle Beach mismanaged its budget for years and now seeks control of a road tax and “more and more money” for its own use, Horry County leaders claim.

Last month, the City of Myrtle Beach sued Horry County over the hospitality tax, which was designed to fund road projects including Interstate 73.

The city’s lawsuit says the 1.5 percent hospitality tax stemmed from a 1996 program to help short- and long-term transportation needs. As part of that program, a tax would apply to Horry County municipalities called a hospitality fee, the filing states. The money funded a road improvement program throughout the county.

The city now claims the county extended the tax without city approval and directed funding to I-73 without Myrtle Beach’s OK. Myrtle Beach asked a judge to declare the Horry County ordinance that extended the tax deadline invalid and to prevent the county from collecting the hospitality fee.

Horry County recently filed its answer to the lawsuit and denied many of the city’s allegations. The county also levied several allegations against the city, its money management and past practices.

“While the Defendant has worked to better the entire community, the City has apparently mismanaged its own budget, and now the City seeks to circumvent state law to shore up its own finances,” Horry County said in its answer.

The county, at several points in the filing, claims the city is trying to “obtain more money for its own use,” citing how the Myrtle Beach budget has “increased significantly” over the past several years with budgetary matters “a cause of concern to the City for some time.”

The county’s answer states the city admitted to giving “full and unanimous support” to Horry County to enact and implement the hospitality fee, which the county says has benefited residents and tourists over the last 22 years.

Horry County questions the city’s understanding of public funds, adding its primary goal is to raise its state-mandated cap on fees it may charge its citizens and guests and use the remaining funds for its own use.

“In its allegations, the City characterizes itself as a victim that will be the proper entity to protect the right of others,” the lawsuit states. “Instead, in its insatiable desire for more money, the City has decided to roll the dice so that it may raise fees and taxes within the municipal limits of the city.”

According to the lawsuit, the county says the city decided to file a lawsuit instead of working with the Horry County Council through “normal correct political process to seek a resolution to best serve all citizens of the mutual communities.”

The tax has become a hot-button issue at government meetings throughout Horry County in recent months with Myrtle Beach, North Myrtle Beach and Surfside Beach voting on ordinances that take control of the tax from Horry County starting on July 1. The county stands to lose roughly $20 million in hospitality tax due to the city and towns’ decisions.

Agreements were made last summer to build I-73 with county officials anticipating funding their portion of the interstate project with the $23 million they received annually in tax money. A deal was also made with S.C. Department of Transportation for the county to pay installments to complete their portion of the billion-dollar interstate project over the next 20 years.

With the fate of I-73 at risk, Myrtle Beach officials reached out to county officials and neighboring municipalities last month about entering into confidential intergovernmental negotiations to fund the project. However, the county has denied their request, stating any negotiations regarding taxpayer money should be discussed in public.

While Horry County Council has questioned the future of I-73 with the city and county at odds, county officials last week voted to keep its contract with SCDOT to build part of I-73 despite the legal showdown.

The council hopes to have the lawsuit settled before taking a second vote to move forward on the project.

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