Tax lawsuit: Myrtle Beach, Horry talk behind closed doors


Horry County and Myrtle Beach held another day of closed-door meetings to see if they could resolve the dispute about the collection of the hospitality fee.

The sides continued to meet as of 6 p.m., despite Horry County Chairman Johnny Gardner telling reporters that a decision would be made by 5 p.m.

Representatives from both governments met at the McNair Law Firm on Thursday to see if they could reach a compromise over how a tax on hospitality services within municipal borders would be dispersed. Earlier this year, Myrtle Beach sued Horry County over the collection of the fee.

Karl Folkens, from Florence, was chosen to mediate all three sessions and is trying to facilitate a compromise. Mediation is a mandatory part of the pretrial process for a civil case.

Thursday marked the third day of mediation between the sides, though they have already exceeded the minimum amount of time they must spend in sessions. Collectively, officials have spent about 30 hours in mediation, with the chance of additional mediation sessions in the future.

Both governments’ councils would have to approve a hypothetical compromise and a judge will need to rubber-stamp the plan before it’s officially in place. Failure to come to terms means the county and Myrtle Beach would continue to fight over the tax through the legal process.

How we got here

Horry County’s collection of 1.5% of the hospitality tax stemmed from a 1996 vote to help short- and long-term transportation needs. As part of the program, the tax called a hospitality fee would apply to Horry County municipalities.

The money funded a road-improvement program throughout the county. With the program originally set to expire in 2017, it was extended in perpetuity by Horry County Council without Myrtle Beach’s renewed consent.

In 2018, county officials voted to dedicate the hospitality funds toward public safety and building Interstate 73. Council’s decision resulted in Myrtle Beach, North Myrtle Beach and Surfside Beach all passing ordinances earlier this year allowing them to collect the tax and barring the county from collecting any hospitality taxes the municipalities collect within their borders.

In March, Myrtle Beach, on behalf of itself and the other municipalities, sued Horry County over its collection of the hospitality tax.

As part of the suit, the city claimed the county needed consent from municipal leaders to continue to collect the tax within city limits after the program expired. Myrtle Beach asked the judge to prevent the county from collecting the tax as the lawsuit was heard.

While county officials argued Myrtle Beach was going to destroy any plans to construct I-73, municipal leaders in a May news conference said the purpose of the lawsuit was about home rule and protecting taxpayers, not an attempt to kill I-73.

Since then, both Horry County and Myrtle Beach have continued to file motions to take control of the tax.

In June, a judge ordered Horry County to cease collecting the fee in the municipalities. The judge allowed the municipalities to collect the fee, but they must keep the revenue in a third-party trust.

Horry County then appealed that decision. The appeals court told the municipalities they could continue collecting the hospitality fee during the lawsuit.

In August, Gardner said he would still like to see a deal reached sooner to avoid a lengthy appeals and trial process.

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Anna Young is the Coastal Cities reporter for The Sun News covering anything and everything that happens locally. Young, an award-winning journalist who got her start reporting local news in New York, is dedicated to upholding the values of journalism by listening, learning, seeking out the truth and reporting it accurately. She earned a bachelor’s degree in journalism from SUNY Purchase College.

Development and Horry County reporter Tyler Fleming joined The Sun News in May of 2018. He covers other stuff too, like reporting on beer, bears, breaking news and Coastal Carolina University. He graduated from The University of North Carolina at Chapel Hill in 2018 and was the 2017-18 editor-in-chief of The Daily Tar Heel. He has won (and lost) several college journalism awards.


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