Where’s That Penny Tax Really Going?

September 21, 2016

Investigative Reports

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By PHILLIP CEASE

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Sometimes it’s a secret. Sometimes it’s not.

Earlier this year, The Nerve revealed that revenue from Richland County’s penny tax program had made its way to various public officials and their friends. Horry County residents, similarly, recently learned that Myrtle Beach’s successful efforts to pass a hospitality tax in 2009 have led to investigations by the U.S. Department of Justice and now the State Ethics Commission.

After voters approve a tax increase of this kind, the projects funded by the additional tax often bear some relationship to the public officials who backed the increase in the first place. Though that’s unfortunate, it’s no great surprise. Beyond specific projects, however, where does the money go?

If you want to know how some chambers of commerce spend their tax dollars you might have to take them to court.

Take the case of DomainsNewMedia.com, LLC vs Hilton Head Island-Bluffton Chamber of Commerce. A Hilton Head businessman wanted to find out how the local chamber spent the tax revenues it received from Hilton Head, Bluffton, and Beaufort County. When he filed a Freedom of Information Act request, chamber officials told him the chamber was not a public body and did not have to disclose how it spent tax revenues. He took the chamber to court, and won.

Not all chambers are quite so opaque, though.

Consider the Myrtle Beach Area Chamber of Commerce. Revenues from the city’s tourism development tax go to the chamber. The Myrtle Beach chamber received, according to its 2015 IRS 990 report, $22.24 million from the City of Myrtle Beach. (The chamber received over $30 million in public money from all sources.)

Money from the tax “promotes, protects and positively impacts its (the chamber’s) members businesses and the Grand Strand business and economy.” Specifically the chamber spends these funds on advertising and promotion for Myrtle Beach. For example, Visibility & Conversions, LLC, a Myrtle Beach-based internet marketing agency, received over $2.5 million in the first quarter of 2016 for internet marketing.

Money from the tax has also helped almost triple chamber president Brad Dean’s salary. In 2007, before the tax passed, Dean made $140,000 a year. This is roughly commensurate with other chamber heads in South Carolina. Since the tax passed, Dean now makes over $385,000 a year – including a $104,500 bonus, according to the 2015 990.

None of this is to suggest Dean doesn’t earn every bit of that salary. According to that 990 form anyway, he works 78.3 hours a week, or 15.6 hours a day, Monday through Friday.

But before taxpayers vote to increase a local tax for “tourism marketing” or anything else, they should take a realistic view of what they’ll be funding if they are even able to find out.

Phillip Cease is director of research at the South Carolina Policy Council