NORTH MYRTLE BEACH — The stage is set for a three-month campaign that's never been waged before in South Carolina as voters in this seaside resort town will decide whether to funnel millions in public dollars to an outside group for destination marketing.
Residents will vote March 6 on whether the city should levy a 1 percent sales tax called the Tourism Development Fee. Eighty percent of the tax's revenue would go directly to a nonprofit marketing organization, such as the North Myrtle Beach Chamber of Commerce, to advertise the tourism-dependent city to visitors. The remaining 20 percent would go to the city, and at least some of that money must be used as a property tax subsidy for year-round residents.
But in Myrtle Beach, the only place that has ever imposed a TDF, the tax was passed by a City Council vote alone. North Myrtle Beach's referendum will be a first-of-its-kind political experiment, as South Carolina voters have never before been directly confronted on whether to earmark millions of tax dollars for advertising.
"In South Carolina, in general, voters are much more pro-business and anti-government, or at least small government," said Kendra Stewart, a College of Charleston political science professor. "Perhaps the belief by those who are putting this forward is that people have more faith or trust in a private entity to make those spending decisions."
The push for a TDF in North Myrtle Beach has created conflict between the city's chamber and elected officials, some of whom would rather use a sales tax to fund infrastructure and capital projects. In this fall's municipal elections, the issue disrupted "a long period of peace" in North Myrtle Beach politics, according to Republican state Sen. Greg Hembree, who represents the area.
"There were statements made by people within the chamber of commerce publicly that they were going to run candidates against the whole City Council and raise money and put a (political action committee) together," Hembree said. "That’s the kind of stuff that hurts people’s feelings, especially when you’ve got a very business-friendly City Council."
Chamber officials are now sticking to a more conciliatory tone.
“We’re enthusiastic," said Marc Jordan, president and CEO of the North Myrtle Beach Chamber of Commerce. "We’ve been shooting for it for 10 years, and they’ve said ‘OK, run with it,’ so we’re going to run with it.”
A unique tax
Municipalities in just two counties — Horry and Charleston — are eligible to impose a TDF by referendum or by a supermajority vote of City Council. In Myrtle Beach, it was enacted by a unanimous City Council vote in 2009.
Discussion of replicating that fee has been percolating in North Myrtle Beach for years. In May 2016, then-chairman of the chamber Bill Griste sent a letter to City Council encouraging members to immediately pass the tax by a supermajority, which requires at least five of seven votes.
At the same time, the city was working in the General Assembly to create a local sales tax for capital projects and infrastructure improvements — something that's already available to counties, but not cities and towns. Chamber officials said they would help support that initiative in Columbia, but only if a TDF were enacted first.
This year, Griste unsuccessfully ran against Councilwoman Nikki Fontana. North Myrtle Beach chamber officials said they did not support a specific candidate, however.
"Our PAC did not get involved because we had a past chairman ... of two years back who was running. And he said, 'Guys, I want y’all as far away from me as I can get you,' and we said, 'You got it,' " Jordan said. "But even so, by association, it was like, ‘That’s the chamber’s candidate.’ "
But North Myrtle Beach Mayor Marilyn Hatley said individual members of the chamber did throw financial support behind challengers this autumn, and that it was understood that the chamber would challenge incumbents if they did not pass the TDF by supermajority.
“Did they directly say that to me? No. But it was insinuated," she said.
Hembree introduced a bill last year that would allow municipalities to levy a sales tax to fund capital projects, and said he would continue to push the idea in the new year.
Other cities around the state, faced with rapid growth, support the effort. Spartanburg City Manager Ed Memmott wrote in an email that he expects that City Council would support "sales tax proceeds to be used for property tax relief, general operations, capital improvements or for any combination of the three."
Julie Horton, who works in government affairs for the city of Greenville, said several Upstate municipalities are interested in the tax mechanism, especially as recent attempts at passing county sales taxes have failed. But a new tax can be a hard sell for the region's conservative delegation.
It's also unlikely that a capital projects tax for cities would pass the state Legislature before voters in North Myrtle beach consider a TDF in March.
In the meantime, North Myrtle Beach chamber officials are eager to tout the benefits of the tourism fee to voters, including property tax rollbacks that can amount to hundreds of dollars a year for residents in the city's southern neighbor.
North Myrtle Beach city staff estimate that a home worth $250,000 would receive a property tax credit of just $51 there. But that calculation uses the minimum amount of money that must be used for rebates: 20 percent of the city's share. The city's estimates earmark its remaining haul, more than $1.3 million, for "public parking facilities acquisition."
"We are extremely confused as to why (the city) wouldn't want the citizens of North Myrtle Beach to garner the full amount allowed for them," North Myrtle Beach Chamber of Commerce Chairman Scott Ellis said in a statement.
Even if voters do choose to impose a TDF, City Council would decide which group or groups get to use the estimated $6.8 million for tourism promotion. The recipient does not have to be the North Myrtle Beach Chamber of Commerce.
“(State law) doesn’t say you have to do that. We more than likely will, but it doesn’t necessarily say that," Hatley said. "So we’ll just wait and see.”