Bill would let cities, counties use more hospitality taxes to repair roads

abeam@thestate.comFebruary 5, 2014 

  • Taxing hospitality

    State law allows cities and counties to charge a tax — the amount varies — on prepared food and beverages. Local governments have to use the money for tourism-related projects. A look at how much local governments collect in hospitality taxes:

    2012: $152,130,309

    2011: $149,150,345

    2010: $141,691,144

    2009: $143,440,977

    2008: $143,056,011

    2007: $127,255,687

    2006: $114,767,802

    Source: Office of Research and Statistics at state Budget and Control Board

South Carolina’s local governments could spend more of their hospitality tax dollars to repair roads and bridges under a bill that passed a Senate subcommittee Wednesday.

But some local governments are concerned the bill is a veiled attempt to pass along the expensive cost of road maintenance to local governments, which say their budgets already are strapped. And arts groups say the proposal would strip them of money they depend on to market their events to tourists.

State law allows local governments to charge a hospitality tax on prepared food and beverages — in Columbia, the tax is 2 cents on the dollar — but restricts how they can spend the money. Now, local governments can spend the money on road repairs only if the road “provides access to tourist destinations.” But S.912 would change that, allowing local governments to spend the money on roads that lead to “destinations contributing to tourist activities.”

“We think all roads lead to tourist destinations and, obviously, there is a need for repairs in the entire state,” said Sen. William O’Dell, R-Abbeville, chairman of the Senate subcommittee that approved the bill. “So this would give the local people an opportunity to use that money to make it more viable to attract tourists.”

State officials say South Carolina has a $29 billion shortfall in the amount of money it needs for road repairs over the next 20 years. The state’s Republican-controlled General Assembly has refused to raise the state’s gas tax — at 16.5 cents a gallon the third-lowest in the country — leaving lawmakers scrambling to find other ways to pay for road repairs, which, they say, are needed to boost economic development.

Last year, for the first time, lawmakers used money from state income and sales tax collections to borrow $500 million to widen some major interstates and begin design work on Columbia’s notorious “Malfunction Junction.”

Also, lawmakers have raided revenue from car sales taxes and end-of-year surpluses to pay for repairs on secondary roads and bridges.

House Ways and Means chairman Brian White, R-Anderson, also has floated an idea of paying local governments to take over maintenance of some roads in the state’s highway system, which, at 41,409 miles, is the country’s fourth-largest state-maintained system.

Now, the Senate is considering the idea of letting local governments use hospitality taxes for roads.

“Councils should be making the decisions for what their citizens want,” said Melissa Carter, a lobbyist with the Municipal Association of South Carolina.

“At the same time, we do have concerns to make sure that this isn’t the beginning of us taking on more responsibility without a funding source.”

John Whitehead, chairman of Columbia’s Hospitality Tax Committee, called the idea “a threat to arts and culture groups.”

“The hospitality tax was put in place essentially to provide a sustainable revenue source from the public sector (for the arts),” Whitehead said. “This is very frightening.”

But Sen. Harvey Peeler, R-Cherokee, the bill’s sponsor, said he got the idea from a city councilman in his district who said the city had “built about all the parks we need” and wanted to use the money to resurface some roads in the city limits.

“That’s directly related to tourism and hospitality,” Peeler said.

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