Horry County will not be allowed to collect its hospitality fee in local cities — at least for now.
Judge William Seals on Wednesday clarified that his June 21 order prohibiting the county’s collection of the controversial fee in Myrtle Beach also applies to other Grand Strand cities. But the judge’s latest decision doesn’t address some officials’ concerns about the potential outcomes of the city’s lawsuit against the county. For example, the county’s 1.5% hospitality fee is higher than some of the city levies that took effect July 1. It's unclear what would happen if the county prevails in court and the businesses haven’t collected the required amount.
“This is still mass confusion,” said treasurer Angie Jones, who filed a request for clarification last week. “Until the judge hears from me and my department, I don’t think there’s a clear understanding what this means.”
Jones was not in a Marion County courtroom Wednesday morning when attorneys for the county and the city of Myrtle Beach debated where the county’s hospitality fee could be collected.
Henrietta Golding, a lawyer representing the county, argued that the judge erred in his June 21 order by preventing the county from collecting its hospitality fee on restaurant meals, hotel rooms and admission tickets in Myrtle Beach. Golding said a judge’s injunction should preserve the status quo and that means allowing the county to continue collecting the fee in all cities.
“It is sad that one municipality, the city of Myrtle Beach, wants to hold Horry County in contempt for doing something that it is lawfully entitled to do,” she said. “That shows you the malice of the city towards Horry County.”
Although Golding insisted the judge’s original order strictly applied to the city of Myrtle Beach, the city’s lawyer John Hoefer countered that county officials knew the June 21 order impacted all local municipalities. He accused the county of trying to circumvent the judge’s ruling.
“Horry County has no intent of complying with your injunction unless you make it clear to them,” he said.
In an order filed late Wednesday, Seals stated that the county’s hospitality fee should not be collected in any local city until the lawsuit is resolved. He said his order for the other cities will take effect Aug. 10 (the one for Myrtle Beach took effect June 21). The judge declined the city’s request to hold the county in contempt but his order said he was being “extremely lenient” with the county because all the cities are clearly involved in the case.
Jones, the treasurer, said she’s grateful that the judge clarified where the fee can be collected, but she hopes he will explore some of her other concerns. She plans to appear in court soon.
The treasurer said businesses continue to contact her office because they aren’t sure what to do. She said some cities told businesses to begin collecting new taxes and fees on July 1 and stores already adjusted their cash registers. But Wednesday’s order for all cities other than Myrtle Beach doesn't take effect until Aug. 10. She said there are also long-term fears about potential refunds and shortfalls, depending on which side prevails.
“I have to address these concerns,” Jones said. “This doesn’t fix anything for me really.”
For more than 20 years, the county has collected the hospitality fee. The revenues were used to pay for 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.
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.