The feud between Horry County and local municipalities reached a courtroom Friday as both sides argued over whether the county needs the cities’ consent to collect hospitality fees inside municipal borders.
County officials have asked the court for an injunction to prevent the cities from changing the fee structure that has been in place for more than 20 years. Those changes are scheduled to take effect July 1.
“They were being diabolical,” said the county’s attorney Henrietta Golding, referring to the cities’ efforts to overhaul the tax structure. But, she added, there is “one fatal flaw” in the cities’ strategy.
“They don’t have a say-so in a county ordinance."
The fight stems from the 1.5 percent fee that is collected on all prepared foods, hotel admissions and attraction tickets sold countywide.
The fee was originally created by a county ordinance in 1996 to help pay for major infrastructure projects, including S.C. 31 and S.C. 22. When the debt on those projects was paid off, county officials planned to use the hospitality revenues to cover the county’s portion of I-73, a proposed interstate that would connect the Grand Strand with I-95 in the Pee Dee. They also considered using a portion of those revenues for public safety services such as the police and fire departments.
But earlier this year the cities of Myrtle Beach, North Myrtle Beach and Surfside Beach decided they wanted to dismantle the hospitality tax structure and not share fee revenues with the county.
Myrtle Beach officials sued the county, calling the county’s collection of hospitality fees inside the city “illegal.”
The disagreement has led to a back and forth between the cities and the county over the fee. Myrtle Beach and North Myrtle Beach officials agreed to negotiate a deal with the county, but only if those conversations took place behind closed doors and all parties agreed to keep the discussions confidential. County officials refused and blasted city leaders for their lack of transparency.
County officials then proposed a specific plan for dividing the tax revenues, but Myrtle Beach and North Myrtle Beach rejected the offer.
During Friday's hearing, county council members and staff sat on one side of the courtroom while officials from North Myrtle Beach, Myrtle Beach and Surfside Beach sat on the other.
The cities' attorney, John Hoefer, argued that the county's legal authority to collect the hospitality fee expired two years ago. He said the cities consented to the original ordinance that took effect Jan. 1, 1997, but they did not consent to extending it (In 2017, the county voted to extend the collection of the fee indefinitely). He said that if the county can collect a fee in a city's borders without the consent of the city, then the city should be able to do the same thing in the unincorporated areas.
"What's good for the goose is good for the gander," he said.
Hoefer also pointed out that Horry County's legislative delegation has supported the county's position and even introduced a bill that would maintain the status quo if it passes next year.
"Why do you need legislation if you already have that right," he asked.
Golding, however, countered that state law doesn't require a county to obtain a city's consent to amend its ordinance. She argued that in the 1990s the municipalities adopted resolutions supporting the original tax structure simply as a political demonstration.
She said that if the cities' new fee structure takes effect and the county continues collecting a 1.5 percent fee, it would make the tax levels in the cities higher than the caps allowed by state law. Should that happen, she said, there's no way to remedy the situation.
"How do you give that back to an individual that bought a snow cone at Broadway?" she said. "It's not possible."
During his rebuttal, Hoefer reiterated that municipal officials should be able to decide whether the county can collect fees in the city limits.
"When a city council has an obligation to its residents to protect the city's political integrity … there's nothing diabolic about that," he said.
Judge William Seals told the attorneys he would let them know his decision, which is expected to be filed in the coming weeks.