Warren Bolton

July 2, 2014

Bolton: Restaurant tax promotes fiscal irresponsibility among SC cities, counties

The SC Legislature’s decision to restrict the use of the 2 percent tax on prepared foods to “tourism-related” projects encourages local governments such as Richland County to spend public dollars carelessly . Unable to spend the money on more important basic service needs, local governments conjure up ways to spend the hospitality tax.

WHILE proponents embrace the 2 percent hospitality tax as a good way to fund arts organizations, festivals and tourist attractions, the levy is one of the most fiscally irresponsible funding streams available to S.C. local governments.

The Legislature’s decision to restrict the use of the tax on prepared foods to “tourism-related” projects encourages — practically demands, really — local governments to spend public dollarscarelessly . Unable to spend the money on more important basic service needs, local governments are forced to conjure up ways to spend the hospitality tax.

The best example in the Midlands is Richland County Council, which has become quite adept at dreaming up grandiose ideas. It’s as if — as the saying goes — this money has been burning a hole in the council’s pocket; members have been frantically searching for something — anything — to spend it on.

But beyond funding existing tourism draws such as the Columbia Museum of Art and Edventure as well as arts organizations and festivals, the council has yet to come up with a sound, responsible project on which to spend its millions. It’s not for a lack of trying. The council has wasted lots of time and money over roughly a decade as various members have concocted one grand idea after another.

Just consider:

•  State Farmers Market: In 2002, Richland sought to team up with the state to replace the farmers market — located on Bluff Road at the time — with an extravagant facility. The county pledged $4 million for land, $250,000 each year for 20 years to promote the market and $500,000 in engineering and architectural costs. Richland purchased a $4.55 million, 196-acre site along Pineview Road in the southeastern part of the county and deeded all but 50 acres to the state. But the state backed out, choosing instead to build in Lexington County, leaving Richland holding the bag — and a $4.55 million mortgage on land it otherwise wouldn’t have bought. Lawmakers later allowed the county to pay off the debt on the land using hospitality taxes and to partner with the S.C. Research Authority to develop a research park on the property.
•  Northeast sports complex: In 2006, the county purchased 207 acres at Farrow and Hard Scrabble roads for a tournament park. Officials began squirreling away hospitality tax dollars to build the unnecessary amenity, whose projected cost had fluctuated over the years between $20 million and $50 million. Last year, the council finally — and wisely — gave up on the project, rejecting a proposal to build a $21 million soccer complex on the site. In all, the county spent more than $7.3 million on land and pre-construction planning.
•  In 2008, Councilman Norman Jackson tried to get the council to buy 128 acres along Lower Richland Boulevard from a developer for a county park and golf course, which a feasibility study said wouldn’t fly. The developer had purchased the site for $1.4 million to build a large subdivision before the bottom fell out of the housing market. Mr. Jackson wanted to pay $2.8 million for the land — double what the developer had paid. Council wisely nixed that deal.
•  Caughman Pond: Not to be denied, Mr. Jackson later convinced the council to buy 44 acres on Caughman Pond along Garners Ferry Road at more than twice what the owner had paid for it. The same month the owner bought the property for $432,000, in March of 2010, Mr. Jackson made the motion to buy it. The eventual purchase price: $1 million.

Mr. Jackson has declared that the park will be a tourist draw, and the council allocated another $1 million to begin what was called phase 1. But has anyone seen any significant progress on the site? Anyone?

•  In mid-2013, Councilman Kelvin Washington spearheaded a grand idea of spreading the wealth from the hospitality tax around among the council districts. He proposed building $44 million in new, mostly unspecified projects outside Columbia’s limits. Fortunately, that idea seemed to lose steam.

Or so I thought.

In recent months, the idea resurfaced, and council members began talking about five new tourist attractions — a water park that would be the largest in South Carolina and an arena with more basketball courts than anywhere else in the southeastern United States are among them — that would be paid for using hospitality taxes. The council has agreed to study the tourism potential of a water park on the property that was to be home to the aborted mega-sports complex at Hard Scrabble and Farrow roads. It also is pursuing a $16 million multi-sport arena south of Columbia, along Bluff Road.

It’s understandable that county officials would explore spending a larger portion of the more than $5 million in annual hospitality tax revenues in unincorporated areas. I don’t begrudge them for wanting to build a sizable project. But the way they have gone about it smacks of a pork-barrel system aimed at allowing council members to dole out goodies in their districts.

Beyond that, if the county builds new parks and recreational facilities, it essentially would be establishing a new department outside of the Richland County Recreation Commission, which is authorized to oversee recreation in unincorporated areas.

In addition, the Recreation Commission is continuing a $50 million parks improvement campaign and doesn’t know how it’s going to pay for operations. What sense does it make to undertake new projects when the county hasn’t determined how to sustain what it already has?

To be fair, Richland County isn’t alone in its race to spend hospitality taxes. Columbia has been doing it for years, and the city of Cayce is looking to join the irresponsible crowd.

Remember last year when Columbia, which still owed $13 million on bonds backed by hospitality taxes, explored borrowing another $4.3 million to $14.3 million to pay for so-called “legacy” projects? The possibilities included a $6.4 million to $10.3 million whitewater park along the Columbia Canal, an unspecified “recreation catalyst project” in North Columbia and a $750,000 children’s splash pad at Finlay Park featuring the “Busted Plug” sculpture by Columbia artist Blue Sky.

And let’s not forget the biggie that the city has committed to: a $36 million baseball park in the proposed Bull Street neighborhood; the city’s portion is $29 million. Governments shouldn’t be the chief financial backers of stadiums for professional sports teams; the return is modest, at best. Yet Columbia has pledged hospitality tax dollars to do just that.

You’ve got to wonder whether these governments would be as willing to commit to some of these projects if they had to dip into the general fund or raise property taxes. But they don’t have to worry about that when the hospitality tax gives them cover to be as irresponsible as they please in the name of tourism, whether the proposed projects will draw outside visitors or not.

Reach Mr. Bolton at (803) 771-8631 or wbolton@thestate.com.

Related content



Editor's Choice Videos