329 myrtle beach sunrise MB_JM04.JPG

The sun rises in Myrtle Beach on Friday, March 27, 2020. Photo by Janet Morgan/janet.morgan@myhorrynews.com

For local governments, settling the Horry County hospitality fee lawsuit means freeing up millions of dollars to help their pandemic-strained budgets.

For many city business owners, the deal translates into the additional work of making sure they are charging the right taxes and fees.

And for customers at restaurants and attractions? They will pay more for meals and tickets in most Grand Strand cities.

If the proposed settlement is approved by the court — a hearing is underway Wednesday morning — the impact will be felt across the county in different ways.

Here’s a breakdown of how:

Your hamburger and water park tickets could cost more

Under the settlement, the county’s 1.5% fee will again be collected on all hotel stays, admission tickets and restaurant meals sold countywide. It has not been collected in local cities since a judge ruled against the county last year.

What this means is that once the fee returns, anyone dining at a café or visiting a theater in Myrtle Beach or Conway will pay more. 

Myrtle Beach, North Myrtle Beach, Conway and Surfside Beach each replaced the county’s fee with their own hospitality taxes last year, but their levies weren’t as high as the county’s fee. 

That means the increase for restaurant meals in those cities will be .5%. The increase will be 1.5% for admission tickets.

Where the rates won’t change is in the areas of the county that aren’t part of a city. Restaurants in places like Carolina Forest, Garden City and Little River never stopped charging the county’s hospitality fee.

Governments will get more money

The settlement is particularly good for the cities. 

The hospitality fee was originally created to pay for road projects such as S.C. 22 and S.C. 31. But county officials continued collecting the fee once the road debt was paid off. They wanted to use that money for building I-73, a proposed interstate that would connect the Grand Strand with I-95. They also hoped to set aside some money for public safety services. That idea frustrated Myrtle Beach officials, who did not want the county collecting a fee inside their borders and using it to pay for county services. Other local cities sided with Myrtle Beach. That dispute prompted the lawsuit.

Under the settlement, each city will receive the money collected within its borders minus a 1% administration fee. 

For Myrtle Beach, that means the city is expected to receive about $19 million per year. 

As part of the deal, the cities will repeal the hospitality and accommodations taxes they implemented to replace the county’s fee.

The cities will actually receive more money under the settlement than they would have under their current tax and fee structure. That’s because state law has changed since the county’s fee was created in the 1990s. The maximum hospitality tax increase the cities could implement was 1% (they already had a 1% tax except Loris, which had a .5% tax); the county’s is 1.5%. The county’s fee must also be collected on admission tickets. Current state law does not allow for an additional local admissions tax. 

The only part of the settlement that hasn’t been sorted out is what will happen to the money that was collected within city borders between the time the original road projects were paid off and a judge forced the county to stop collecting the fee last year ($19 million). 

The county wants all of that money to go back to each city where it was collected. Myrtle Beach, however, wants half to be returned to the cities and the other half to go into a “common fund.” That fund would be used to pay people who could provide receipts showing that they had been improperly charged the fee. After six months, the leftover money would be provided to the S.C. Bar Foundation, the charitable arm of the S.C. Bar Association. 

Under the settlement, the county and the cities have asked the court to determine how that $9.5 million will be distributed.

Although county officials have continued collecting the 1.5% fee in the unincorporated areas, they haven't spent any of that money because of the pending litigation. The cities have done the same thing with their hospitality and accommodations taxes.

Horry County Council Chairman Johnny Gardner said the settlement ultimately should provide much needed funding for cash-strapped local governments.

“That will free up a lot of money for Horry County, a lot of money for Myrtle Beach, North Myrtle Beach, Loris, Aynor, so on and so forth,” he said. “We can start trying to redo our budgets to make up for the lost revenue that this COVID has ravaged on this county.”

As for I-73, the settlement doesn't include any funding for the road, but it does call for the parties to work together on transportation issues, including the interstate.

"By entering into this Agreement, the County and the Participating Municipalities agree to work cooperatively together and in good faith on a separate funding plan for the portion of the proposed Interstate Highway 73 and other needed road projects within Horry County," the agreement states.

Business owners must adjust again

For the second straight year, many business owners will be forced to adjust to new local taxes and fees.

Last year, the legal turmoil and questions about the different levies led many business owners to call the Horry County Treasurer’s Office, which collects the hospitality fee, asking what to do. 

Store owners must know the appropriate taxes and fees so they can program their cash registers. 

By failing to collect the correct hospitality fees or not remitting those fees to the county, a business could technically face a misdemeanor charge. If convicted, the penalty is a fine of up to $500 and 30 days in jail per offense. 

Last year, the frustration became so great that Treasurer Angie Jones intervened in the lawsuit, asking a judge for clarification. 

Last week, Jones said that once the court approves the settlement, the affected business owners would be notified of the new rates and her office would help them to adjust to the changes. 

“We’ll work with people,” she said. “We’re not going to beat people to death.”

Contact Charles D. Perry at 843-488-7236

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I'm the editor of myhorrynews.com and the Carolina Forest Chronicle, a weekly newspaper in Horry County, South Carolina. I cover county government, the justice system and agriculture. Know of a story that needs to be covered? Call me at 843-488-7236.

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