Myrtle Beach businesses will begin charging the city’s new tax rates for restaurant meals and admission tickets on July 1, but Horry County officials plan to continue collecting their controversial hospitality fee in all other Grand Strand cities.
The county’s announcement on Tuesday frustrated North Myrtle Beach officials, who expected the county to stop collecting the hospitality fee in their city’s borders after a judge ruled last week that the county needed Myrtle Beach’s consent to do that inside the city limits. They vowed to challenge the county in court.
“If the judge has ruled in Myrtle Beach’s favor, then I would assume the same rules for one municipality would be the same for all municipalities,” North Myrtle Beach Mayor Marilyn Hatley said. “Until we get this hospitality tax issue straightened out, the county does not need to continue collecting any hospitality fee, because at the present time they’re illegally collecting it. Over the past two years they’ve illegally collected it. We need to bring this to a halt and let us work through this situation.”
Surfside Beach Mayor Bob Childs declined to comment on the county's decision.
Myrtle Beach’s collection will be about $15 million annually, according to Mike Shelton, Myrtle Beach’s chief financial officer.
Myrtle Beach’s city spokesman Mark Kruea said the city has posted the new collection information on its social media pages, included it in the Progress Report mailed with utility bills and has sent 1,500 letters to businesses that collect the fee.
“We do not take this lightly,” Mayor Brenda Bethune said of the new collection structure. “We do not look at this as, ‘Oh my gosh, we now have $15 million to spend.’ Whatever we do, it will be done with a lot of thought and planning and in putting our community first.
“That is the reason that we took on this battle, if that’s what you want to call it, to begin with. It’s to put our residents and our community first.”
At issue is the 1.5 percent hospitality fee that is charged on all prepared food, hotel admissions and attraction tickets sold countywide. For more than 20 years, the county has collected this fee. The revenues were used to pay for major road projects, including 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 use a portion for 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. The lawsuit didn’t name Surfside Beach or North Myrtle Beach, but it said the case was for “itself and a class of similarly situated plaintiffs.”
"[That] clearly includes municipalities in Horry County," North Myrtle Beach officials said in a prepared statement.
Earlier this year, 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 Friday.
But on Tuesday, the county filed a motion asking the court to reconsider the decision. In court papers, the county's lawyer said the fee “has benefitted the entire County, including the City of Myrtle Beach.”
The county’s attorney Henrietta Golding also argued that a temporary injunction should preserve the status quo while a lawsuit proceeds. Golding maintains the county doesn’t need the city’s consent to impose the fee. She asked the court to reconsider the case and grant the county’s request to allow it to continue collecting the hospitality fee inside city limits.
In a news release issued Tuesday afternoon, county officials noted that they plan to continue collecting the hospitality fee in the unincorporated areas and in all local municipalities that are not Myrtle Beach.
North Myrtle Beach officials also issued a news release Tuesday.
"As emphasized in that Court order, South Carolina law preserves the autonomy of municipalities within their borders, absent their agreement or consent or an express statutory provision to the contrary," the city's statement said. "The County and the City each possess the authority to enact uniform service charges but no law grants the City or the County the power to unilaterally impose uniform service charges within the jurisdictional limits of the other."
Myrtle Beach’s Shelton explained the businesses are responsible for collecting the tax. The changes they will face are who to remit the payment to. As of July 1 the taxes will continue to be collected but the first remittance to the city will be Aug. 20.
He said some of the collections will be the same and some will decrease.
Using an example of a four-member family vacationing at the beach staying in a $225 a night hotel room, Shelton said the hospitality tax remains at $6.75, not including the state tax, the 1% tax from Horry County and 1% tax from Horry County Schools.
That same family, he said, could eat at a $20 a plate restaurant and pay 40 cents less in fees under the new system and later the family could enjoy an amusement for $121.96 paying $3.66 in taxes before July 1 and $1.22 under the new system.
Mary Jeffcoat, Myrtle Beach city council member, said the recently approved budget for 2019-2020 did not include the $15 million anticipated from the new system.