What a second unsuccessful day of mediation means for Horry County-Myrtle Beach tax saga

Horry County and Myrtle Beach were unable to make an agreement on the hospitality fee after two days of mediation.

Representatives from both governments worked on Saturday to try to find a compromise over how a tax on hospitality services within municipal borders would be dispersed. In total, nearly 20 hours over two days were spent mediating but neither side could find an agreeable middle ground.

“As of right now we’re at an impasse and mediation is over,” Horry County Chairman Johnny Gardner said. “I think both sides worked hard at it ... it was a good mediation, it was just the parties just did not see eye to eye on the final details.”

Mediation is a mandatory step before a case can go to trial. Gardner said the two parties could go back into mediation, but at this time there is no scheduled date,j meaning the lawsuit will move forward.

The matter will now go back to the courts. First up will be settling an appeal Horry County filed against a decision Judge William Seals Jr. made in June that barred the county from continuing to collect a 1.5 percent portion of the fee in municipalities during the duration of the trial.

After the appeal, the lawsuit will go back in front of Seals again for the main trial.

How we got here

Horry County’s collection of 1.5 percent of the hospitality tax stemmed from a 1996 vote to help short-and long-term transportation needs. As part of the program, the tax called a hospitality fee would apply to Horry County municipalities.

The money funded a road-improvement program throughout the county. With the program originally set to expire in 2017, it was extended in perpetuity by Horry County Council that same year without Myrtle Beach’s renewed consent.

In 2018, county officials voted to dedicate the hospitality funds toward public safety and building I-73. Council’s decision resulted in Myrtle Beach, North Myrtle Beach and Surfside Beach all passing ordinances earlier this year allowing them to collect the tax and barring the county from collecting any hospitality taxes the municipalities collect within their borders starting July 1.

In March, Myrtle Beach, on behalf of itself and the other municipalities, sued Horry County over its collection of the hospitality tax, a uniform tax imposed on sectors of the hospitality industry, including prepared meals, food and beverages sold in or by establishments.

As part of the suit, the city claimed the county needed consent from municipal leaders to continue to collect the tax within city limits after the program expired. Myrtle Beach asked the judge to prevent the county from collecting the tax as the lawsuit was heard.

While county officials argued Myrtle Beach was going to destroy any plans to construct I-73, municipal leaders in a May news conference said the purpose of the lawsuit was about home rule and protecting taxpayers, not an attempt to kill I-73.

Since then, both Horry County and Myrtle Beach have continued to file motions to take control of the tax.

In June, Seals ordered Horry County to cease collecting the fee in the municipalities. He allowed the municipalities to collect the fee, but they must keep the revenue in a third-party trust.

Horry County then appealed that decision soon after. Last week the appeals court told the municipalities they could continue collecting the hospitality fee during the lawsuit.

If mediation proves unsuccessful, the appeal must be resolved before the main trial can begin.

Check myrtlebeachonline.com for ongoing coverage of the hospitality fee dispute.

This story was originally published August 10, 2019 at 7:35 PM.