As a practical matter, continuing the 1-cent sales tax for revenue to promote tourism is all but a done deal in the City of Myrtle Beach. The City Council is set to reimpose the penny tax effective Aug. 1, 2019, for another 10 years — and at least $273 million. What should be taking place is a referendum in which registered voters decide if the TDF will be continued.
Without a doubt, the TDF, started in 2009, has helped grow area tourism and the region’s economy. Myrtle Beach Mayor Brenda Bethune said the TDF helps market the area’s No. 1 industry, tourism. “… it creates jobs for this area and it also helps to expand our seasonality. When we can advertise to people who come here different times of the year, it helps us expand our season. That is economic growth.”
The state of South Carolina created the TDF as an option for local governments, to pay for tourism marketing. City or town councils may impose the 1 percent sales tax by a vote of the council, or it may be put to voters in a referendum. City of North Myrtle Beach voters in March overwhelmingly rejected a TDF.
Myrtle Beach first imposed the TDF by a council vote and is one such vote away (second reading, in legislative terms) from continuing the TDF. Bethune makes the point that during her successful mayoral election campaign “… I talked with voters about it and not one person asked me to do away with it. So, I look at that as a referendum because people did vote and if they were against it, I would think they would have voted against the people who were in favor of it.”
Many folks did vote against the former mayor, John Rhodes, who supported the TDF. It’s doubtful the TDF was a deciding factor in votes for Bethune or Rhodes, and it’s a big stretch to claim campaign conversations make a referendum. Sorry, Madam Mayor, Myrtle Beach has had nothing close to a referendum on the TDF.
Here’s how the TDF works. After the first year, 80 percent of the revenue must go to out-of-state tourism promotion, handled by the Myrtle Beach Area Chamber of Commerce. In fiscal year 2016, the Myrtle Beach TDF produced $27,247,624, which says a great deal about the importance of retail sales in the area economy; that total meant $21.8 million for tourism marketing, $4,468,610 for property tax relief for homeowners and $980,914 for tourism-related capital improvements. The law allows flexibility in how a municipality or county uses its 20 percent; a minimum of 4 percent must be for property tax rebates.
The city’s Comprehensive Annual Financial Report estimates a tax credit of $860 for owners of homes with a $350,000 market value. Based on household expenditures of $1,000 a month, Myrtle Beach residents pay about $120 in additional retail sales tax. That net gain of $740 for Myrtle Beach homeowners was a selling point for the TDF 10 years ago, and it surely would be a factor today, if city voters had a referendum.
The more than $27 million annual revenue comes from many non-residents of the city, including area residents who spend money in Myrtle Beach as well as millions of visitors. Sales taxes are regressive in that all (well-off and low income) pay the same rate. Some like the idea of tourists helping pay for services while with others it’s a sore point that any tax may be imposed to pay for advertising.
The case here is not against continuing the TDF in Myrtle Beach, but in how it’s being done. Residents deserve a vote on their taxes, and the mayor and council members should have set a referendum.