Myrtle Beach City Council passed a revised settlement with Horry County Tuesday governing the collection of hospitality and accommodation taxes in city limits.
The ordinance returns city fees to 0.5%, down from 3%, and allows the county to resume its pre-2019 taxation plan.
The revisions come after a ruling from the S.C. Supreme Court nullified a city-county settlement reached in October.
Myrtle Beach initially sued Horry County in 2019 over its use of revenue collected within city limits for projects that exclusively benefitted the county.
Passed in 1996, the original joint taxation agreement allowed the county to levy a 1.5% hospitality and accommodation tax within municipal limits to fund road projects, such as S.C. 22 and S.C. 31.
But after it paid off the roads, the county proposed allocating some of the revenue toward public safety projects that would only benefit the county, prompting a suit from the city.
In 2019, a state judge ruled against the county, barring it from collecting fees within city limits. Myrtle Beach then increased its accommodations tax to 3% to replace the county tax in March 2019.
Under the settlement reached in October, the county would levy 1.5% taxes on hotel, restaurant and admissions transactions.
But the S.C. Supreme Court ruled in December that the city had improperly allowed the circuit court that approved the deal to determine the distribution of the Common Fund, meaning there was no “meeting of the minds” and thus no valid settlement.
The new city-county settlement, which passed its second reading Tuesday, enables the county to return to its pre-injunction revenue scheme but requires it to remit 99% of all funds collected within corporate limits back to municipalities for approved uses under state law.
According to city documents, “The resulting inflow of hospitality fees from the 1.5% is projected to increase City revenues by $18.5 million next fiscal year.”
Horry County will be able to retain 1% for its own purposes as an administrative fee.