MYRTLE BEACH, SC (WBTW) – Myrtle Beach residents and visitors will continue to pay a one-cent sales tax for the next 10 years.
In the second and final reading of an ordinance designed to “reimpose” the tourism development fee, Myrtle Beach City Council members voted in favor of the TDF. Myrtle Beach leaders opted for a majority vote from council to renew the one-cent sales tax rather than letting city residents vote on the issue.
Prior to the first reading of the sales tax ordinance at the end of March, Mayor Bethune told News13 she supports the city’s controversial “tourism development fee” and she doesn’t want a voter referendum on the tax.
“Going door-to-door and making voter phone calls, people didn’t say, ‘We want a referendum, we want to do away with the TDF,’” Bethune said. “What I heard was ‘Please keep our property taxes low.’”
Despite an online petition demanding a referendum, and some community members publicly criticizing the mayor and council’s decision, Mayor Bethune says she made her position on the tourism development fee clear while campaigning and residents voted her into office.
“In my mind, that basically was a referendum,” Bethune said.
According to a city blog post defending the tax, the tourism tax gives an 82 percent rebate on city property tax bills. “Yes, local residents pay the extra one percent sales tax on their purchases, but the bulk of the TDF revenues come from the millions of visitors who vacation here,” the post said.
Because the rebate is based on a percentage of someone’s property taxes, the biggest benefits go to the wealthy. One person with a home worth nearly $9 million received a tax credit, paid by the sales tax, worth $22,315.83 in 2017, tax records show. According to the city, a person with a home valued at $199,000 would receive a tax credit of only $505.46.
The Local Option Tourism Development Fee Act requires 80 percent of the money generated by the one-percent sales tax to be used for out-of-market advertising. Myrtle Beach gives the money to the Myrtle Beach Area Chamber of Commerce. The rest of the tax money pays for residential property tax relief and tourism-related capital projects.
Critics have also questioned how the money is spent by the Myrtle Beach Chamber of Commerce. A criticism that has gained traction with a recently filed lawsuit alleging the chamber targets money to companies owned by current and former chamber employees.
The lawsuit, filed Thursday by Karon Mitchell, states that the Myrtle Beach Area Chamber of Commerce “has consistently redirected taxpayer funds” to Crony Companies. Court documents allege the Crony Companies receive taxpayer money for “unsubstantiated goods and services at a mark-up.”
The lawsuit claims that 46% of the total money spent through the TDF Funds, MB-A-Tax Funds, and HC-A-Tax Funds were paid to eight companies over the last three years. The lawsuit then identifies the companies.
News13 Investigates found a $23 million discrepancy in the lawsuit alleging the chamber sent millions of tax dollars to “crony companies.”
News13 used transparency reports posted on the chamber’s website. The documents show approximately $74 million of taxpayer money spent between 2015 and 2017.
The chamber’s data verifies much of the spending tied to the eight companies. The lawsuit’s claim for a company called Visibility and Conversions, however, didn’t match the chamber data.
Mitchell’s lawsuit said the company received $28 million — by far the biggest amount described in the lawsuit — over the last three years. News13’s database only showed $4.3 million of payments specifically to Visibility and Conversions.
However, the chamber appeared to not share vendor names for approximately $30 million of transactions paid for with taxpayer money, according to a News13 analysis of “transparency reports” published by the chamber.
Approximately $29 million of the generically-identified spending was tied to “internet advertising” and “digital advertising.” Where other transactions listed vendors, these transactions used terms like “display advertising,” “email marketing,” “mobile marketing,” “other digital marketing,” “search marketing,” “social media marketing,” “video advertising,” and “other.”
“Other” accounted for $95,509.29 of the chamber’s spending of taxpayer money.
In a press conference Tuesday afternoon, the Myrtle Beach Area Chamber of Commerce vehemently denied allegations made in a lawsuit claiming taxpayer money was funneled to “crony companies” run by current or past chamber employees.
Chamber board chairperson Carla Schuessler addressed the lawsuit, filed by Karon Mitchell, as a “baseless, vindictive attack.” Read more about that press conference and watch the video here.
Tuesday’s vote renews the one-cent sales tax through Aug. 1, 2029.