SC Supreme Court will hear Horry County’s argument for hospitality tax appeal

The State of South Carolina Supreme Court will hear Horry County’s argument on why it should be allowed to collect the hospitality fee.

Chief Justice Donald W. Beatty filed an order that said the highest court in the state would hear an appeal filed by Horry County in July.

Other than some filings laying out the case for the appeal, this is the first movement since mediation was held in August. There’s no scheduled date for the state Supreme Court to hear the argument.

Myrtle Beach sued Horry County in March over the collection of a 1.5 percent hospitality fee, a uniform tax imposed on sectors of the hospitality industry, including prepared meals, food and beverages sold in or by establishments.

The appeal from Horry County came after Judge William Seals Jr. issued a temporary order allowing Myrtle Beach and municipalities to collect the tax on hospitality services for the duration of a larger lawsuit. Seals later clarified the order by saying the municipalities must keep the money in escrow until the lawsuit is complete.

Once Horry County filed an appeal of Seals’ order and mandatory mediation proved unsuccessful, the judge ruled the main case couldn’t move forward until the appeal was settled. The appellate court said Horry County cannot resume collecting the fee during the appeals process.

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.

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. The appeals court told the municipalities they could continue collecting the hospitality fee during the lawsuit.

Horry County and Myrtle Beach underwent two days of mediation in attempt to bring an end to the lawsuit. The governments were unable to reach an agreement.

In August, Horry County Chairman Johnny Gardner said he would still like to see a deal reached sooner to avoid a lengthy appeals and trial process.

This story was originally published September 30, 2019 at 10:17 AM.