COLUMBIA — State lawmakers on Wednesday introduced changes to a bill aimed at establishing a funding source for I-73.
But officials from Grand Strand cities blasted the proposed legislation, saying it still needlessly interferes with local government.
“We do a good job, an efficient job, of collecting our taxes,” North Myrtle Beach Mayor Marilyn Hatley said during an S.C House subcommittee hearing. “Is it what government does every time someone has a disagreement, we make another law to take care of that disagreement?”
The bill in question would allow the county to resume collecting the hospitality fee countywide. State Rep. Alan Clemmons, R-Myrtle Beach, said the goal of the proposed legislation is to reestablish the levies that existed before the city sued the county over the hospitality fee last year.
If the bill becomes law, the system would follow the process Horry County Council approved in 2018 that pledged at least $23 million garnered from the hospitality fee each year for interstate construction. The remaining balance would then be distributed pro-rata between every municipality in the county and Horry County Government based upon sales in those areas.
“That’s the point where it’s been correctly pointed out to us our desire to change so that there is a pro-rata contribution between the cities and the counties with regard to I-73," Clemmons said.
The amended bill states that if the county council determines there are no viable interstate projects or related improvements to be made, one-third of the revenues must be retained by the county to be used for allowed purposes, with the remaining two-thirds being distributed at least quarterly to the municipalities.
The hospitality fee has historically been collected countywide on all restaurant meals, hotel stays and admission tickets. It was created in the 1990s to pay for road projects such as S.C. 31 and S.C. 22. When the road debt was paid off, county leaders had planned on using that money for I-73. However, they also hoped to spend a portion of those dollars on improving public safety services. That upset some municipal leaders, who objected to fees being collected inside their borders paying for county services.
After Myrtle Beach sued the county over the fee in March, a circuit court judge ruled that the county could not collect the levy inside city limits. The county has appealed the decision and the S.C. Supreme Court is expected to hear the case next month.
The Clemmons-sponsored bill would allow the county to collect and administer the hospitality fee.
North Myrtle Beach's Hatley said the city supports the construction of I-73 and is willing to pay part of the cost, but it opposes the bill. If the bill becomes law, she said, it would directly interfere with the city’s rights to collect and administer a hospitality tax within its borders.
The mayor added that when the county began collecting the hospitality fee countywide in the 1990s, it had local cities’ consent. The municipalities agreed to have the fee collected countywide for 20 years.
“Those 20 years ran out and that’s why we’re here where we are today,” she said. “The county continued collecting those fees and decided that they may want to use those fees for a purpose that the cities have not agreed upon.”
She questioned why the county should be able to collect tax money countywide without the municipalities’ consent and have the authority to collect and administer the fee revenue.
Myrtle Beach officials also criticized the bill. Reading a statement on behalf of the city, Tony Denny with the firm Denny Public Affairs said, “In the view of the city of Myrtle Beach, the legacy countywide hospitality fee bill improperly takes power away from the governing bodies of the city of Myrtle Beach and every other municipality in Horry County and gives it to Horry County Council.”
Like Hatley, he said the city objects to the county collecting a fee within municipal borders without the cities’ permission.
Other opponents of the bill expressed concern that it could affect communities outside of Horry County.
Melissa Harrill with the Municipal Association of South Carolina contends the bill “forces responsibility away from the cities and gives it to the county.”
“It may well just be Horry County, but even in principle that is problematic for us,” she said. “We would prefer to have a partnership with our counties, not an adversarial relationship.”
Both Clemmons and Horry County Council Chairman Johnny Gardner said they would prefer the city and county reach some form of agreement on the hospitality fee. Myrtle Beach Mayor Brenda Bethune, who also attended Wednesday's hearing, declined to comment beyond the city’s official statement.
In recent court filings, the city of Myrtle Beach has argued Horry County Council’s decision last year to cancel a contract with the S.C. Department of Transportation for constructing I-73 rendered the hospitality fee invalid because the levy is not being collected for a specific project. The city also argues the fee has always been invalid because the county council didn’t take the required three votes to approve it in 1996.
Clemmons said that if the city of Myrtle Beach and other municipalities succeed in their litigation, a portion of the hospitality fees (one-half of 1%) would be unable to be collected moving forward — meaning approximately $15 million each year would no longer be an available income stream for infrastructure in the county.
“That’s very distressing,” Clemmons said.
State Rep. Bill Whitmire, R-Oconee, said as an outsider he supports the amended bill and would like to be able to travel to Myrtle Beach using an interstate.
“All I've heard for 17 years is we need I-73,” he said. “I cannot for the life of me figure out why you folks can’t resolve your differences. Why do you have to go to court?
“It seems to me that your No. 1 goal should be to get I-73 to Myrtle Beach,” he added. “And if you have to bite the bullet a little bit money-wise, then that’s what you should do. … You need to think of the long-term future of your part of the state.”
The bill will now head to the state House’s Ways and Means Committee for consideration.