A ruling from an appellate court means Horry County cannot collect the controversial hospitality fee inside municipal borders for the foreseeable future.
For more than 12 hours, Myrtle Beach and Horry County officials could not resolve their dispute over the controversial levy. That means the two sides will hold a second round of talks Saturday at the Myrtle Beach Convention Center.
The initial discussion was held Aug. 1 bringing the two sides together for the first time since the city sued the county in March, accusing the county of illegally collecting a 1.5 percent levy on all hotel stays, restaurant meals and admission tickets sold in the city.
The mediation ended shortly after 9:30 p.m. The process went smoothly and both sides were cordial, said Horry County Council Chairman Johnny Gardner.
However, the issue remains unresolved.
For more than 20 years, the county has collected the hospitality fee countywide, including inside the municipalities. The revenues were used to pay for road projects such as S.C. 31 and S.C. 22. Once the debt for the highways was paid off, county officials planned to use some of the tax revenues to pay for building I-73. They also expected to spend a portion on improving public safety services in unincorporated Horry.
But earlier this year, Myrtle Beach leaders opted to overhaul the hospitality fee structure and install their own tax and fee system. They said they didn’t want to share these revenues with the county. North Myrtle Beach and Surfside Beach officials did the same thing.
In March, Myrtle Beach sued the county, saying in court papers that the county was illegally collecting the hospitality fee because that program was supposed to expire in 2017.
County officials have argued that they voted to extend the fee that year, but city leaders said the county can’t legally do that without their consent.
Myrtle Beach officials asked a judge to issue a temporary injunction barring the county from collecting the hospitality fee in the city while the lawsuit went through the court system. The judge sided with the city and issued his ruling on June 21. The county filed a motion asking the court to reconsider the decision, but the judge declined.
The county asked the S.C. Court of Appeals to lift the injunction while the lawsuit goes through the appeals process, but on Wednesday the court rejected the county’s request. That means the county cannot collect the fee inside local cities for the time being. The county’s appeal is still moving forward.
County officials have suggested dedicating $18 million of the hospitality fee revenues each year to build the county’s portion of I-73, a proposed interstate that would connect with I-95.
After the $18 million comes off the top for I-73, county officials recommended dividing the remaining $24.5 million between the county and the municipalities. Under that system, the county would receive $9.8 million and $14.7 million would go to the cities. Any revenues collected above those projections would go to the community where the money was collected.
The county projects the pot of available public dollars would be nearly $14 million richer under that system than if the county's hospitality fee wasn't collected in the incorporated areas and the cities continued with their new fee structure.
City officials had agreed negotiate splitting the hospitality fee revenues, but only behind closed doors. That led to county officials criticizing the city for not being transparent. County leaders refused to meet in secret.
The Aug. 1 meeting was ordered after Horry County Treasurer Angie Jones filed a motion asking the court for a swift mediation to help resolve the situation for area business owners. Some owners have struggled to adjust to the recent tax and fee changes.