Committee v. City of Myrtle Beach

Citation403 S.C. 76,742 S.E.2d 371
Decision Date08 May 2013
Docket NumberNo. 27249.,27249.
CourtUnited States State Supreme Court of South Carolina
PartiesTOURISM EXPENDITURE REVIEW COMMITTEE, Appellant, v. CITY OF MYRTLE BEACH, Respondent. Appellate Case No. 2011–200407.

403 S.C. 76
742 S.E.2d 371

TOURISM EXPENDITURE REVIEW COMMITTEE, Appellant,
v.
CITY OF MYRTLE BEACH, Respondent.

Appellate Case No. 2011–200407.

No. 27249.

Supreme Court of South Carolina.

Heard Jan. 8, 2013.
Decided May 8, 2013.


[742 S.E.2d 372]


John M.S. Hoefer and Chad N. Johnston, both of Willoughby & Hoefer, PA, of Columbia, for Appellant.

Michael W. Battle, of Battle & Vaught, PA, of Conway, for Respondent.


Justice KITTREDGE.

[403 S.C. 78]In this declaratory judgment action, the Tourism Expenditure Review Committee appeals the circuit court's declaration of the meaning of section 6–4–10 of the South Carolina Code. We vacate the circuit court's order for lack of subject matter jurisdiction and dismiss this appeal.

I.

This case involves the South Carolina Accommodations Tax Act (Act), which sets forth the administration of the state sales tax of seven percent imposed on all sleeping accommodations provided to overnight guests. S.C.Code Ann. § 12–36–920(A) (Supp.2012). That seven percent tax is composed of several components, including a two percent “local accommodations tax” (A–Tax), which is remitted to the counties and municipalities where it was collected. 1S.C.Code Ann. § 12–36–2630(3). Counties and municipalities receiving A–Tax revenues must expend those funds in accordance with the statutory provisions governing the allocation of A–Tax revenues (the Act). [403 S.C. 79]SeeS.C.Code Ann. § 6–4–5 to –35 (Supp.2012) (providing procedure for expending A–Tax funds).

For purposes of disposing of this case, we need only examine briefly section 6–4–10(4), which provides for the expenditure of A–Tax funds generally referred to as “65% Funds.” These funds are allocated for “tourism-related expenditures.” S.C.Code Ann. § 6–4–10(4)(a) and (b). It is statutory provisions relating to these 65% Funds that are the subject of this appeal.

The Act defines tourism-related expenditures to include:

The criminal justice system, law enforcement, fire protection, solid waste collection, and health facilities when required to serve tourists and tourist facilities. This is based on the estimated percentage of costs directly attributed to tourists.

S.C.Code Ann. § 6–4–10(4)(b)(4).


Subsection (4)(b) further explicitly provides that municipalities with “a high concentration

[742 S.E.2d 373]

of tourism activity” may use the 65% Funds “to provide additional county and municipal services, including, but not limited to, law enforcement, traffic control, public facilities....” However, subsection (4)(b) also provides:

The funds must not be used as an additional source of revenue to provide services normally provided by the county or municipality but to promote tourism and enlarge its economic benefits through advertising, promotion, and providing those facilities and services which enhance the ability of the county or municipality to attract and provide for tourists.

S.C.Code Ann. § 6–4–10(4)(b) (emphasis added). The Act makes clear that “[i]n the expenditure of these [65%] funds, counties and municipalities are required to promote tourism....” S.C.Code Ann. § 6–4–10(4)(d).


The legislature specifically provided for a local advisory committee and, more importantly for purposes of this appeal, a statewide oversight body—the Tourism Expenditure Review Committee (TERC)—to ensure counties and municipalities comply with the basic requirements set forth in the Act. S.C.Code Ann. § 6–4–35. Counties and municipalities are [403 S.C. 80]required to submit annual reports, which TERC reviews to determine if the expenditures comply with the Act. S.C.Code Ann. §§ 6–4–25(D); –35(B)(1)(a). In its annual report, the county or municipality must submit a “list of how funds from the accommodations tax are spent” and “must include funds received and dispersed [sic] during the previous fiscal year.” S.C.Code Ann. § 6–4–25(D)(3).

The legislature granted TERC the authority to challenge a local government's expenditure of 65% Funds. TERC must notify the county or municipality, which may provide “further supporting information” regarding its expenditure for TERC to consider in its compliance determination. S.C.Code Ann. § 6–4–35(B)(1)(a). Significantly, for TERC to pursue a challenge, the Act further provides:

If [TERC] finds an expenditure to be in noncompliance, it shall certify the noncompliance to the State Treasurer, who shall withhold the amount of the expenditure found in noncompliance from subsequent distributions in accommodations tax revenue otherwise due the municipality or county. An appeal from an action of [TERC] under this subitem lies with the Administrative Law Judge Division.

S.C.Code Ann. § 6–4–35(B)(1) (emphasis added).


II.

Over the years, the City of Myrtle Beach and TERC have occasionally disputed the meaning of various provisions of section 6–4–10(4)(b). However, no particular expenditure or allocation is at issue here, nor are any A–Tax revenues being held by the State Treasurer in connection with this appeal. While TERC has indicated that it may certify as noncompliant the City's expenditures of 65% Funds, it has not done so here. To resolve this difference of opinion, the City first filed an action in the Administrative Law Court, which granted TERC's motion to dismiss the matter for lack of jurisdiction. TERC then filed the current action in circuit court as a declaratory judgment action seeking to have section...

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