A-tax revenue should not be restricted to nonprofits

Myrtle Beach City Council members have expressed disagreement about use of revenue from the state accommodations tax, paid on lodging costs. Council members’ different views about A-tax money, and in-kind services, have stalled a request from the Carolina Country Music Fest for $100,000 in A-tax funds to promote the June festival.

The second Carolina Country Music Fest is scheduled June 9-12 on the former Pavilion site in downtown Myrtle Beach. The event will feature big-time performers Tim McGraw, Keith Urban and Florida Georgia Line (Brian Kelley, Tyler Hubbard) and many other national, regional and local artists. Last year, the first festival drew more than 20,000 folks each day. That number of people generates hundreds of thousands of tourism revenue for hotels, restaurants and other attractions.

A-tax revenue, by S.C. law, must be used to promote or increase tourism and for municipal services such as law enforcement, road and street maintenance and beach nourishment. The tax is paid on lodging and municipalities are allotted revenue from the state tax. The law requires that 30 percent a city’s or town’s allotment is used “only for advertising and promotion of tourism to develop and increase tourism attendance.”

Nothing in the law precludes A-tax money going to for-profit organizations, such as the CCMF, although the Myrtle Beach City Council has limited its distribution to nonprofits, city manager John Pedersen pointed out several weeks ago when three for-profit organizations – CCMF, the Myrtle Beach Pelicans and NMB Drag Strip Inc. – asked the city for a total of $442,000. Whoa, some said, that money is supposed to go to nonprofits and Pedersen made the clarification.

Now, the council has approved festival organizers’ $108,000 in-kind services request but has put off a decision on $100,000 for promotion. Councilman Mike Lowder, noting organizers’ positive advance ticket sale reports, suggested that the event seems to be doing fine without the promotion money. Lowder also says the city set a precedent “about in-kind services versus A-tax money. I just want folks to understand that we’re not going to double-dip here.”

Lowder does not speak for every member of the council and he is missing more than one point. The precedent to which he refers is the denial of $2,800 in services requested by the Oceanfront Merchants Association, which receives A-tax revenue. The association ultimately canceled this year’s St. Patrick’s Day event.

Councilman Wayne Gray notes that such local events are a far cry from a festival that is international in scope, drawing fans (who have purchased tickets) from 42 states and eight other nations, and apparently on track to draw more people than last year. Gray is correct in saying “It doesn’t offend me that a promoter is asking both for accommodations tax [revenue for promotion and in-kind services] ... it’s appropriate to evaluate the impact of the event and separate that from who the promoter is.”

In-kind services and advertising/promotion are different matters; receiving one should not necessarily preclude having the other. Every entity, nonprofit or for-profit, seeking A-tax money won’t necessarily qualify. When they do meet the legal requirements, they should not be denied simply because they are for-profit organizations.

This story was originally published March 26, 2016 at 11:07 PM with the headline "A-tax revenue should not be restricted to nonprofits."