Myrtle Beach wants a judge to make Horry County stop collecting, using hospitality taxes
Myrtle Beach residents have suffered “irreparable harm” due to Horry County collecting its share of hospitality tax, according to an injunction the city filed last week. The City of Myrtle Beach also is requesting the county be prohibited from collecting any additional funds while the ongoing lawsuit over hospitality taxes between the municipalities is debated.
Myrtle Beach also wants to restrict the county from spending any hospitality tax, which was designed to fund road projects, collected since Jan. 1, 2017, according to court documents.
The city’s lawsuit, which was filed in March, says the 1.5 percent hospitality tax stemmed from a 1996 program to help short- and long-term transportation needs. As part of the 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 claimed the county extended the tax without city approval and directed funding to I-73 without Myrtle Beach’s consent. 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.
Last month, Horry County filed its answer to the lawsuit and denied many of the city’s allegations, implying Myrtle Beach mismanaged its budget for years and wants control of the tax to obtain more money for its own use. The county also levied several allegations against the city, its money management and past practices.
The city, in its injunction, is now arguing the county has deprived residents and tourists of their voice by acting in an “oppressive manner towards the fee-paying residents and visitors” by illegally imposing the hospitality tax within municipal limits.
The city claims if the hospitality tax remains in effect during litigation, residents will inevitably pay a cumulative 6 percent on accommodations and 4.5 percent on prepared food and beverages, in addition to the state sales tax and other fees or taxes.
“Injunctive relief is the only avenue to ensure the city and class members pay only a single, properly enacted hospitality and accommodations charge on a given transaction,” the injunction states. “An injunction is needed to restore the voice of municipal residents.”
The tax has become a controversial 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 taxes due to the municipalities’ decisions.
County officials made a deal last summer with the S.C. Department of Transportation where it agreed to pay installments from the hospitality tax to complete its portion of the billion-dollar interstate project over the next 20 years.
With the fate of I-73 in question, Myrtle Beach officials reached out to county officials and neighboring municipalities in March about entering into confidential intergovernmental negotiations to fund the project. However, the county has denied the 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, it has deferred its decision to keep its contract with SCDOT to build part of I-73.
At Horry County Council’s Spring Budget Retreat on May 1, Interim Assistant Administrator Barry Spivey said Horry would not spend any hospitality money collected until the lawsuit is resolved.
Council Member Dennis DiSabato asked if it was possible for the county to spend some of the uncontested hospitality fee money during the current budget cycle.
“Wouldn’t we at least be able to use the 1.5 percent dollars generated within the unincorporated areas or are we supposed to keep it entirely in trust until this is resolved,” DiSabato asked County Attorney Arrigo Carotti.
Council will go into executive session at its upcoming meeting on May 7 to discuss the issue. Carotti said DiSabato’s question could be addressed at that time.
Sun News reporter Tyler Fleming contributed to this report.
This story was originally published May 6, 2019 at 4:30 PM.
