Gov. Henry McMaster recently began meeting with Grand Strand leaders about their hospitality fee dispute as part of his effort to preserve funding for I-73, two officials who met with the governor said.
McMaster and DOT commissioner Tony Cox met with Myrtle Beach Mayor Brenda Bethune, North Myrtle Beach Mayor Marilyn Hatley, Horry County Council Chairman Johnny Gardner and attorneys for each side earlier this month in Columbia, local leaders said. They plan to speak again in November.
“The governor, he’s concerned about Horry County not being able to pay for their share of I-73 that was previously talked about and he asked if there was a way that we could come to come some kind of decision,” Hatley said. “But with Myrtle Beach and with Horry County being in mediation, there was no way that could be settled until the mediation was settled.”
The discussions are not part of the county and cities’ formal mediation, which will continue Thursday at 10 a.m. Officials from the county and the cities have already met twice to discuss hospitality fees, but so far the mediation hasn’t been successful.
The legal fight between the cities and the county began earlier this year when Myrtle Beach leaders decided they no longer wanted the county collecting a 1.5 % hospitality fee inside city limits on restaurant meals, hotel stays and admission tickets. North Myrtle Beach and Surfside Beach leaders agreed with Myrtle Beach, which sued the county in March.
The cities maintain the hospitality tax agreement they supported in the 1990s expired in 2017 and the county never obtained their permission to extend it. They have also objected to county officials’ suggestion that some of the money be used for improving public safety services in the county.
Earlier this year, the cities approved new fee structures that did not require them to share similar revenues with the county.
County officials have argued that the traditional fee system brought in over $12 million more per year than the cities' new funding method. They also maintain that both the county and the cities should help pay for the proposed interstate.
McMaster’s interest in the case stems from a contract that county leaders signed with the S.C. Department of Transportation (DOT) in late 2018 to pay for work on I-73.
County officials had planned to use hospitality fee revenues to pay for $12.4 million worth of projects in the first year of the DOT contract as well as tens of millions more in subsequent years.
The contract is also a critical part of a federal grant application the DOT submitted for I-73 funding. DOT Secretary Christy Hall has warned that the state could be forced to withdraw its request for the $348 million grant because of uncertainty about how much local tax money would be available for the I-73 project.
County leaders insist they don’t have enough money to pay the DOT for work on the proposed interstate without additional city funding.
On Aug. 28, county council voted cancel the DOT contract in 90 days unless the county reaches an agreement with local municipalities to jointly fund the road.
Myrtle Beach spokesman Mark Kruea declined to discuss the governor’s role in the hospitality fee discussions.
Although Hatley said the initial meeting with McMaster saw “very little accomplished,” all parties plan to keep talking.
“He’s very interested and very concerned and plans to meet with all of us again in November,” Hatley said. “The main concern is trying to reach an agreement on [how] I-73 funds will be paid.”
Gardner, the county council chairman, agreed.
“We didn’t do any mediation with [the governor],” he said. “We just met and talked. I think basically he was just asking where we were at.”
In the settlement negotiations, Gardner said the county and the cities are essentially in the same place they were after the second day of mediation. However, both sides agreed to keep trying to find a resolution.
“The county feels good enough that it’s worth … to get together one more time,” he said. “To get it resolved, that’s much better than a trial.”
If the two sides can't agree to a settlement, the S.C. Supreme Court has agreed to hear the case.
A spokesman for the governor could not be reached for comment.